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Accounting Policies of Bharat Heavy Electricals Ltd. Company

Mar 31, 2023

Note [1] - Company Information

Bharat Heavy Electricals Limited (âBHEL or âthe Company") is a public limited company domiciled in India and has its registered office at BHEL House, Siri Fort, New Delhi -110049

The Company is an integrated power plant equipment manufacturer and is engaged in design, engineering, manufacture, construction, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy, viz, Power, Transmission, Industry, Transportation, Renewable Energy, Water, Oil & Gas and Deference & Aerospace.

Note [2] - Significant accounting policies

1. Basis of preparation of Financial Statements

a) Statement of Compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind-AS) as notified by Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereof as well as with the additional requirements applicable to financial statements as set forth in Companies Act, 2013 and amended thereof.

b) Basis of measurement

The financial statements have been prepared on a going concern basis and on an accrual method of accounting. Historical cost is used in preparation of the financial statements except as otherwise mentioned in the policy.

c) Functional and presentation currency

The financial statements are prepared in INR, which is the Company''s functional currency.

d) Use of Estimates and Judgments

The preparation of the financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Critical estimates and judgements in applying accounting policies

Estimates and judgements made in applying accounting policies that have significant effect on the amounts recognized in the financial statements are as follows:

i) Revenue

The Company uses input method based on cost approach in accounting for the revenue in respect of construction contracts. Use of input method requires the Company to estimate its costs relative to the total expected costs in the satisfaction of its performance obligation. The estimates are assessed continually during the term of the contract and the company remeasures its progress towards complete satisfaction of its performance obligations satisfied over time at the end of each reporting period.

Company updates its estimated transaction price at each reporting period, to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period.

ii) Property, plant and equipment

The charge in respect of periodic depreciation is derived after estimating the asset''s expected useful life and the expected residual value at the end of its life. The depreciation method, useful lives and residual values of Company''s assets are estimated by management at the time the asset is acquired and reviewed during each financial year.

iii) Employee Benefit Plans

Employee defined benefit plans and long term benefit plans are measured on the basis of actuarial assumptions. However, any changes in these assumptions may have impact on the reported amount of obligation and expenses.

iv) Provisions and contingencies

Assessments undertaken in recognising provisions and contingencies have been made as per the best judgement of the management based on the current available information.

2. Property Plant & Equipment (PPE)

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any.

Depreciation on property, plant and equipment (other than those used abroad under contract) is charged on straight-line method as per the useful life prescribed in Schedule II of the Companies Act, 2013, except in the following items where estimated useful life is based on technically assessed estimated useful life :-

Asset Category	(Years)
Plant & equipment	15-30
Buildings	5-60
Electricals installations & eqipments	10-30
Erection equipment, Capital tools & tackles	5
Drainage, sewerage & water supply	30
Servers and networks	5
Solar Power Generation Plant	25

Depreciation methods, useful lives and residual values are reviewed in each financial year and changes, if any, are accounted for prospectively. Right-of-use assets are amortised over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term

Property Plant & Equipment costing ''10,000/- or less and those whose written down value as at the beginning of the year is '' 10,000/- or less, are depreciated fully.

At erection/project sites: The cost of roads, bridges and culverts is fully amortized over the tenure of the contract, while sheds, railway sidings, electrical installations and other similar enabling works (other than temporary structures) are depreciated over the tenure of the contract after retaining residual value, if any.

Assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

Temporary structures are fully depreciated in the year of construction.

Significant components with different useful lives are accounted for and depreciated separately

3. Leases

At the inception of an arrangement, the Company determines whether such an arrangement is or contains a lease.

Upon initial recognition, assets taken on lease are capitalized under right-of-use assets at cost which comprises initial measurement of lease liability at present value, initial lease payments less incentives, initial direct costs and estimated cost of dismantling and removing the underlying assets, if any.

Lease payments made under leases are apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

For assets given on finance lease, the Company recognizes finance income over the lease term using effective interest rate method. Initial direct costs incurred are included in the initial measurement of the finance lease receivable and reduce the amount of income recognized over the lease term.

Lease income arising from operating lease is recognized as income over the lease period on a straight line basis except where the periodic increase in lease rentals is in line with expected general inflation.

4. Intangible assets

Intangible items costing more than '' 10000/- are evaluated for capitalization and are carried at cost less accumulated amortization and accumulated impairment, if any.

Intangible assets are amortised in Statement of Profit and Loss on a straight-line method over the estimated useful lives from the date that they are available for use. The estimated useful lives for the intangible assets are as follows:

Software 3 years

Others 10 years.

Intangible assets having WDV '' 10000/- or less at the beginning of the year are amortized fully.

Amortization period and amortization methods are reviewed in each financial year and changes, if any, are accounted for prospectively.

Expenditure on research activities is recognized in statement of profit and loss as incurred. Expenditure on development activities is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs, if any.

Assets acquired for purposes of research and development are capitalized.

5. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are added to the cost of such assets.

An asset that necessarily takes a substantial period of time, considered as more than twelve months, to get ready for its intended use or sale is a qualifying asset for the purpose.

AH other borrowing costs are recognized in the statement of profit and loss in the period in which they are incurred.

6. Investments in Subsidiaries & Joint ventures

Investments in subsidiaries and joint ventures are accounted at cost less impairment losses, if any.

If the intention of the management is to dispose the investment in near future, it is classified as held for sale and measured at lower of its carrying amount and fair value less costs to sell.

7. Inventories

Inventory is valued at cost or net realizable value, whichever is lower. In respect of valuation of finished goods and work-in-progress, cost means factory cost. In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

8. Revenue Recognition

Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

In relation to construction and long term service contracts, the company transfers control of goods or services to the customer and recognizes revenue over the time. Revenue is recognized using input method based on the cost approach. Progress towards complete satisfaction of performance obligation satisfied over time is remeasured at reporting period end.

Revenue from sale of goods and services is recognized on the transfer of control to the customer and upon the satisfaction of performance obligations under the contract.

Other Income

Dividend income is recognized in statement of profit and loss on the date on which the Company''s right to receive payment is established.

Interest Income is recognized using effective interest rate method.

Claims for export incentives/ duty drawbacks, duty refunds and insurance are accounted for on accrual basis.

9. Foreign currency Translation/Transaction

Transaction in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

Foreign currency denominated monetary assets and liabilities are translated into the functional currency at exchange rates in effect at the end of each reporting period. Foreign exchange gains or losses arising from settlement and translations are recognized in the statement of profit and loss.

Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevailing at the date of transaction.

10. Employee Benefits

Defined contribution plans

The Company''s contribution to Pension fund including Family Pension Fund for the employees is covered under defined contribution plan and is recognized as employee benefit expense in statement of profit and loss in the periods during which services are rendered by employees.

Defined benefit plans

The Company''s gratuity scheme, provident fund scheme, travel claims on retirement and post-retirement medical facility scheme are in the nature of defined benefit plans.

The liability recognized in the balance sheet in respect of these defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets, if any. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using an appropriate government bond rate that have terms to maturity approximating to the terms of the related liability.

Remeasurements comprising actuarial gains and losses as well as the difference between the return on plan assets and the amounts included in net interest on the net defined benefits liability (asset) are recognized in other comprehensive income (net of income tax).

Other expenses related to defined benefit plans are recognized in statement of profit and loss.

Long term Leave Liability

which the absences occur. The Company records a liability for accumulated balance based on actuarial valuation determined using projected unit credit method. Remeasurements and other expenses related to long term benefit plans are recognized in statement of profit and loss.

11. Provisions

(i) Claims for liquidated damages against the Company are recognized in the financial statements based on the management''s assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

(ii) The Company provides for anticipated costs for warranties when it recognizes revenues on the related products or contracts and maintain the same throughout the warranty period. The provision is based on historical experience / technical assessment.

(iii) When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately.

(iv) Other provisions are recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

However, where the effect of time value of money is material, provisions are determined and maintained by discounting the expected future cash flows, wherever applicable.

12. Government Grants

Government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Non-monetary grants are accounted at Fair Value of assets and are treated as deferred income. Deferred income is recognized in the statement of profit and loss on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate.

13. Income Taxes

Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in statement of profit and loss except to the extent that it relates to items recognized in other comprehensive income or directly in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates (tax laws) enacted or substantively enacted by the end of the reporting period and includes adjustment on account of tax in respect of previous years.

Deferred tax is recognized using the balance sheet method, providing for temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base.

Deferred tax is measured at the tax rates that are expected to apply when the temporary differences are either realised or settled, based on the laws that have been enacted or substantively enacted by the end of reporting period.

A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of Deferred tax assets are reviewed at each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Additional Income tax that arise from the distribution of dividends are recognized at the same time when the liability to pay the related dividend is recognized.

14. Impairment of Assets

Impairment of financial assets

The loss allowance in respect of trade receivables and lease receivables are measured at an amount equal to lifetime expected credit losses.

The loss allowance in respect of all other financial assets, which are required to be impaired, are measured at an amount equal to lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. However, if, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, the loss allowance is measured at an amount equal to 12-month expected credit losses.

Impairment of Non- Financial Assets

The carrying amount of cash generating units is reviewed at each reporting date where there is any indication of impairment. An impairment loss is recognized in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating units. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable

amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

15. Segment Reporting

Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which are not allocable to segments on a reasonable basis, are included under âUnallocated revenue/ expenses/ assets/ liabilities".

16. Financial Instruments

i) Non-derivative financial instruments

Non derivative financial instruments are classified as :

- Financial assets, measured at (a) amortized cost and (b) fair value through Profit and Loss (âFVTPL").

- Financial liabilities carried at amortized cost.

Initially, all financial instruments are recognized at their fair value. Transaction costs are included in determining the carrying amount, if the financial instruments are not measured at FVTPL. Financial assets are derecognized when substantial risks and rewards of ownership of the financial asset have been transferred. In cases where substantial risks and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset. Financial liabilities are derecognized when contractual obligations are discharged or cancelled or expired.

Non-derivative financial assets are subsequently measured as below:

A. Amortized cost -

âFinancial Instruments at amortized cost" are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into

account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.

B. FVTPL Category -

Financial instruments classified in this category are subsequently carried at fair value with changes recorded in the statement of profit and loss. Directly attributable transaction costs are recognised in statement of profit and loss as incurred.

Non-derivative financial liabilities are subsequently measured as below:

Subsequent to initial recognition, non - derivative financial liabilities are measured at amortised cost using the effective interest method.

ii) Derivative financial instruments

Embedded derivatives, if any, having material impact, are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit and loss.

Derivatives are recognized and measured initially at fair value. Attributable transaction cost are recognized in statement of profit and loss as cost. Subsequent to initial recognition, derivatives are measured at fair value through profit and loss.

17. Cash and Cash Equivalent

Cash and cash equivalents comprise cash at bank and on hand. It includes term deposits and other shortterm money market deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Mar 31, 2022

Note [1] - Company Information

Bharat Heavy Electricals Limited (âBHEL or âthe Company") is a public limited company domiciled in India and has its registered office at BHEL House, Siri Fort, New Delhi -110049

Note [2] - Significant accounting policies

1. Basis of preparation of Financial Statements

a) Statement of Compliance

b) Basis of measurement

c) Functional and presentation currency

The financial statements are prepared in INR, which is the Company''s functional currency.

d) Use of Estimates and Judgments

Critical estimates and judgements in applying accounting policies

Estimates and judgements made in applying accounting policies that have significant effect on the amounts recognized in the financial statements are as follows:

i) Revenue

The Company uses input method based on cost approach in accounting for the revenue in respect of construction contracts. Use of input method requires the Company to estimate its costs relative to the total expected costs in the satisfaction of its performance obligation. The estimates are assessed continually during the term of the contract and the company re-measures its progress towards complete satisfaction of its performance obligations satisfied over time at the end of each reporting period.

Company updates its estimated transaction price at each

reporting period, to represent faithfully the circumstances present at the end of the reporting period and the changes in circumstances during the reporting period.

ii) Property, plant and equipment

iii) Employee benefit plans

iv) Provisions and contingencies

Assessments undertaken in recognising provisions and contingencies have been made as per the best judgement of the management based on the current available information.

2. Property, Plant & Equipment (PPE)

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any.

Depreciation on property, plant and equipment (other than those used abroad under contract) is charged on straightline method as per the useful life prescribed in Schedule II of the Companies Act, 2013, except in the following items where estimated useful life is based on technically assessed estimated useful life :-

Asset Category	(Years)
Plant & Equipment	15-30
Buildings	5-60
Electrical installations & Equipments	10-30
Erection equipment, Capital tools & tackles	5
Drainage, sewerage & water supply	30
Servers and networks	5
Solar Power Generation Plant	25

Property, Plant & Equipment costing '' 10,000/- or less and those whose written down value as at the beginning of the year is '' 10,000/- or less, are depreciated fully.

structures) are depreciated over the tenure of the contract after retaining residual value, if any.

Assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

Temporary structures are fully depreciated in the year of construction.

Significant components with different useful lives are accounted for and depreciated separately.

3. Leases

At the inception of an arrangement, the Company determines whether such an arrangement is or contains a lease.

4. Intangible assets

Intangible items costing more than '' 10000/- are

evaluated for capitalization and are carried at cost less accumulated amortization and accumulated impairment, if any.

Software 3 years

Others 10 years

Intangible assets having WDV '' 10000/- or less at the beginning of the year are amortized fully.

Amortization period and amortization methods are reviewed in each financial year and changes, if any, are accounted for prospectively.

Expenditure on research activities is recognized in statement of profit and loss as incurred. Expenditure on development activities is capitalized only if the expenditure

can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs, if any.

Assets acquired for purposes of research and development are capitalized.

5. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are added to the cost of such assets.

An asset that necessarily takes a substantial period of time, considered as more than twelve months, to get ready for its intended use or sale is a qualifying asset for the purpose.

All other borrowing costs are recognized in the statement of profit and loss in the period in which they are incurred.

6. Investments in Subsidiaries & Joint ventures

Investments in subsidiaries and joint ventures are accounted at cost less impairment losses, if any.

If the intention of the management is to dispose the investment in near future, it is classified as held for sale and measured at lower of its carrying amount and fair value less costs to sell.

7. Inventories

8. Revenue Recognition

Revenue is recognized to depict the transfer of promised goods or services to custome in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue from sale of goods and services is recognized on the transfer of control to the customer and upon the satisfaction of performance obligations under the contract.

Other Income

â¢ Dividend income is recognized in statement of profit and loss on the date on which the Company''s right to receive payment is established.

â¢ Interest Income is recognized using effective interest rate method.

â¢ Claims for export incentives/ duty drawbacks, duty refunds and insurance are accounted for on accrual basis.

9. Foreign currency Translation/Transaction

Transaction in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevailing at the date of transaction.

10. Employee Benefits Defined Contribution Plans

Defined benefit plans

The Company''s gratuity scheme, provident fund scheme, travel claims on retirement and post-retirement medical facility scheme are in the nature of defined benefit plans.

Other expenses related to defined benefit plans are recognized in statement of profit and loss.

Long Term Leave Liability

The Company measures the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur. The Company records a liability for accumulated balance based on actuarial valuation determined using projected unit credit method. Remeasurements and other expenses related to long term benefit plans are recognized in statement of profit and loss.

11. Provisions

(iii) When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately.

However, where the effect of time value of money is material, provisions are determined and maintained by discounting the expected future cash flows, wherever applicable.

12. Government Grants

13. Income Taxes

Deferred tax is recognized using the balance sheet method, providing for temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base.

A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of Deferred tax assets are reviewed at each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Additional Income tax that arise from the distribution of dividends are recognized at the same time when the liability to pay the related dividend is recognized.

14. Impairment of Assets Impairment of financial assets

The loss allowance in respect of trade receivables and lease receivables are measured at an amount equal to lifetime expected credit losses.

Impairment of Non- Financial Assets

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

15. Segment Reporting

Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which are not allocable to segments on a reasonable basis, are included under "Unallocated revenue/ expenses/ assets/ liabilities".

16. Financial Instruments

i) Non-derivative financial instruments

Non derivative financial instruments are classified as :

- Financial assets, measured at (a) amortized cost and (b) fair value through Profit and Loss (âFVTPL").

- Financial liabilities carried at amortized cost.

Non-derivative financial assets are subsequently measured as below:

A. Amortized cost -

âFinancial Instruments at amortized costâ are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.

B. FVTPL Category -

Non-derivative financial liabilities are subsequently measured as below:

Subsequent to initial recognition, non - derivative financial liabilities are measured at amortised cost using the effective interest method.

ii) Derivative financial instruments

17. Cash and Cash Equivalent

Cash and cash equivalents comprise cash at bank and on hand. It includes term deposits and other short-term money market deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Mar 31, 2021

Note [1] - Company Information

Bharat Heavy Electricals Limited (âBHEL or âthe Company") is a public limited company domiciled in India and has its registered office at BHEL House, Siri Fort, New Delhi -110049

Note [2] - Significant accounting policies

1. Basis of preparation of Financial Statements

a) Statement of Compliance

b) Basis of measurement

c) Functional and presentation currency

The financial statements are prepared in INR, which is the Company''s functional currency.

d) Use of Estimates and Judgments

Critical estimates and judgements in applying accounting policies

Estimates and judgements made in applying accounting policies that have significant effect on the amounts recognized in the financial statements are as follows:

i) Revenue

The Company uses input method based on cost approach in accounting for the revenue in respect of construction contracts. Use of input method requires the Company to estimate its costs relative to the total expected costs in the satisfaction of its performance obligation. The estimates are assessed continually during the term of the contract and the company re-measures its progress towards complete satisfaction of its performance obligations satisfied over time at the end of each

reporting period.

ii) Property, plant and equipment

iii) Employee benefit plans

iv) Provisions and contingencies

Assessments undertaken in recognising provisions and contingencies have been made as per the best judgement of the management based on the current available information.

2. Property Plant & Equipment (PPE)

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any.

Asset Category	(Years)
Erection equipment, Capital tools & tackles	5
Drainage, sewerage & water supply	30
Servers and networks	5
Solar Power Generation Plant	25

Property Plant & Equipment costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully.

capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs, if any.

Assets acquired for purposes of research and development are capitalized.

5. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are added to the cost of such assets.

An asset that necessarily takes a substantial period of time, considered as more than twelve months, to get ready for its intended use or sale is a qualifying asset for the purpose.

All other borrowing costs are recognized in the statement of profit and loss in the period in which they are incurred.

6. Investments in Subsidiaries & Joint ventures

Investments in subsidiaries and joint ventures are accounted at cost less impairment losses, if any.

If the intention of the management is to dispose the investment in near future, it is classified as held for sale and measured at lower of its carrying amount and fair value less costs to sell.

7. Inventories

Inventory is valued at cost or net realizable value, whichever is lower. In respect of valuation of finished goods and work-inprogress, cost means factory cost. In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

8. Revenue Recognition

Revenue from sale of goods and services is recognized on the transfer of control to the customer and upon the satisfaction of performance obligations under the contract.

Other Income

â¢ Dividend income is recognized in statement of profit and loss on the date on which the Company''s right to receive payment is established.

â¢ Interest Income is recognized using effective interest rate method.

â¢ Claims for export incentives/ duty drawbacks, duty refunds and insurance are accounted for on accrual basis.

the tenure of the contract after retaining residual value, if any.

Assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

Temporary structures are fully depreciated in the year of construction.

Significant components with different useful lives are accounted for and depreciated separately.

3. Leases

At the inception of an arrangement, the Company determines whether such an arrangement is or contains a lease.

4. Intangible assets

Intangible items costing more than ''10000/- are evaluated for capitalization and are carried at cost less accumulated amortization and accumulated impairment, if any.

Software 3 years

Others 10 years

Intangible assets having WDV '' 10000/- or less at the beginning of the year are amortized fully.

Amortization period and amortization methods are reviewed in each financial year and changes, if any, are accounted for prospectively.

9. Foreign currency Translation/Transaction

Transaction in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevailing at the date of transaction.

10. Employee Benefits

Defined Contribution Plans

Defined benefit plans

The Company''s gratuity scheme, provident fund scheme, travel claims on retirement and post-retirement medical facility scheme are in the nature of defined benefit plans.

Other expenses related to defined benefit plans are recognized in statement of profit and loss.

Long Term Leave Liability

The Company measures the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period. Expense on nonaccumulating compensated absences is recognized in the period in which the absences occur. The Company records a liability for accumulated balance based on actuarial valuation determined using projected unit credit method. Remeasurements and other expenses related to long term benefit plans are recognized in statement of profit and loss.

11. Provisions

(ii) For construction contracts the company provides warranty cost at 2.5% of the revenue progressively as and when it recognises the revenue and maintain the same throughout the warranty period. For other contracts, provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately.

However, where the effect of time value of money is material, provisions are determined and maintained by discounting the expected future cash flows, wherever applicable.

12. Government Grants

Government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Non monetary grants are accounted at Fair Value of assets and are treated as deferred income. Deferred income is recognized in the statement of profit and loss on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate.

13. Income Taxes

Deferred tax is recognized using the balance sheet method, providing for temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base.

Deferred tax is measured at the tax rates that are expected to apply when the temporary differences are either realised

or settled, based on the laws that have been enacted or substantively enacted by the end of reporting period.

A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of Deferred tax assets are reviewed at each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Additional Income tax that arise from the distribution of dividends are recognized at the same time when the liability to pay the related dividend is recognized.

14. Impairment of Assets

Impairment of financial assets

The loss allowance in respect of trade receivables and lease receivables are measured at an amount equal to lifetime expected credit losses.

Impairment of Non- Financial Assets

15.Segment Reporting

Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which are not allocable to segments on a reasonable basis, are included under "Unallocated revenue/ expenses/ assets/ liabilities".

16.Financial Instruments

i) Non-derivative financial instruments

Non derivative financial instruments are classified as :

- Financial assets, measured at (a) amortized cost and (b)

fair value through Profit and Loss (âFVTPL").

- Financial liabilities carried at amortized cost.

Non-derivative financial assets are subsequently measured as below:

A. Amortized cost -

âFinancial Instruments at amortized cost" are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.

B. FVTPL Category -

Non-derivative financial liabilities are subsequently measured as below:

Subsequent to initial recognition, non - derivative financial liabilities are measured at amortised cost using the effective interest method.

ii) Derivative financial instruments

17. Cash and Cash Equivalent

Mar 31, 2018

1. Basis of preparation of Financial Statements

a) Statement of Compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as notified by Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereof as well as with the additional requirements applicable to financial statements as set forth in Companies Act, 2013 and amended thereof.

b) Basis of measurement

c) Functional and presentation currency

The financial statements are prepared in INR, which is the Companyâs functional currency.

d) Use of Estimates and Judgements

The preparation of the financial statements in conformity with Ind As requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Critical estimates and judgements in applying accounting policies

Estimates and judgements made in applying accounting policies that have significant effect on the amounts recognized in the financial statements are as follows:

i) Revenue

The Company uses the percentage-of-completion method in accounting the revenue in respect of construction contracts. Use of the percentage-of-completion method requires the Company to estimate total contract revenue, and remaining cost to complete the contract at the end of each reporting date. the financial reporting of these contracts depends on estimates that are assessed continually during the term of these contracts, therefore recognized revenue and profit are subject to change as the contract progresses to completion.

ii) Property, plant and equipment

The charge in respect of periodic depreciation is derived after estimating the assetâs expected useful life and the expected residual value at the end of its life. the depreciation method, useful lives and residual values of Companyâs assets are estimated by management at the time the asset is acquired and reviewed during each financial year.

iii) Employee Benefit Plans

iv) Provisions and contingencies

Assessments undertaken in recognising provisions and contingencies have been made as per the best judgement of the management based on the current available information.

2. Property, plant and equipment (PPE)

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any.

Depreciation on property, plant and equipment (other than those used abroad under contract) is charged on straight-line method as per the useful life prescribed in Schedule II of the Companies act, 2013, except where estimated useful life is shorter based on technically assessed estimated useful life as shown hereunder:-

Depreciation methods, useful lives and residual values are reviewed in each financial year and changes, if any, are accounted for prospectively. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Freehold land is not depreciated.

Property, plant and equipment costing J10,000/- or less and those whose written down value as at the beginning of the year is J10,000/- or less, are depreciated fully.

Assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

Temporary structures are fully depreciated in the year of construction.

Significant components with different useful lives are accounted for and depreciated separately

3. Leases

At the inception of an arrangement, the Company determines whether such an arrangement is or contains a lease.

Upon initial recognition, assets taken on finance lease are capitalized at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Lease rentals arising under operating leases are recognized in the statement of profit and loss on a straight-line basis over the lease term except where the increment in lease rentals is in line with general rate of inflation.

Lease income arising from operating lease is recognized as income over the lease period on a straight-line basis except where the periodic increase in lease rentals is in line with expected general inflation.

4. intangible assets

Intangible items costing more than J10,000/- are evaluated for capitalization and are carried at cost less accumulated amortization and accumulated impairment, if any.

Intangible assets are amortised in statement of profit and loss on a straight-line basis over the estimated useful lives from the date that they are available for use. the estimated useful lives for the intangible assets are as follows:

Software 3 years Others 10 years

Intangible assets having WDV J10,000/- or less at the beginning of the year are amortized fully.

Amortization period and amortization methods are reviewed in each financial year and changes, if any, are accounted for prospectively.

Expenditure on research activities is recognized in statement of profit and loss as incurred. Expenditure on development activities is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset. the expenditure capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs, if any.

Assets acquired for purposes of research and development are capitalized.

5. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are added to the cost of such assets.

An asset that necessarily takes a substantial period of time, considered as more than twelve months, to get ready for its intended use or sale is a qualifying asset for the purpose.

ah other borrowing costs are recognized in the statement of profit and loss in the period in which they are incurred.

6. investments in Subsidiaries & Joint ventures

Investments in subsidiaries and joint ventures are accounted at cost less impairment losses, if any.

If the intention of the management is to dispose the investment in near future, it is classified as held for sale and measured at lower of its carrying amount and fair value less costs to sell.

7. inventories

8. Revenue Recognition

Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the entity and the amount of revenue can be measured reliably.

a. Construction Contracts

Revenue from construction contracts including long term service contracts are recognized using the âPercentage of Completionâ method. Percentage of completion is determined based on contract costs incurred to date as a percentage of total estimated contract costs required to complete the contract.

B. Other than Construction Contracts

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer in accordance with the contract. Revenue from services other than long term service contracts are recognised when services are performed as per contract.

Other income

- Dividend income is recognized in statement of profit and loss on the date on which the Companyâs right to receive payment is established.

- Interest Income is recognized using effective interest rate method.

- Claims for export incentives / duty drawbacks, duty refunds and insurance are accounted for on accrual basis.

9. Foreign currency Translation/Transaction

Transaction in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevailing at the date of transaction.

10. Employee Benefits

Defined contribution plans

The Companyâs contribution to Pension Fund including Family Pension Fund for the employees is covered under defined contribution plan and is recognized as employee benefit expense in statement of profit and loss in the periods during which services are rendered by employees.

Defined benefit plans

The Companyâs gratuity scheme, provident fund scheme, travel claims on retirement and post-retirement medical facility scheme are in the nature of defined benefit plans.

Other expenses related to defined benefit plans are recognized in statement of profit and loss.

Long term Leave Liability

11. Provisions

(i) Claims for liquidated damages against the Company are recognized in the financial statements based on the managementâs assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

(ii) For construction contracts the Company provides warranty cost at 2.5% of the revenue progressively as and when it recognises the revenue and maintain the same throughout the warranty period. For other contracts, provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately.

However, where the effect of time value of money is material, provisions are determined and maintained by discounting the expected future cash flows, wherever applicable.

12. Government Grants

13. income Taxes

Deferred tax is recognized using the balance sheet method, providing for temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base.

a deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the temporary difference can be utilized.

the carrying amount of deferred tax assets are reviewed at each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Additional Income tax that arise from the distribution of dividends are recognized at the same time when the liability to pay the related dividend is recognized.

14. impairment of Assets Impairment of financial assets

the loss allowance in respect of trade receivables and lease receivables are measured at an amount equal to lifetime expected credit losses.

Impairment of Non- Financial assets

the carrying amount of cash generating units is reviewed at each reporting date where there is any indication of impairment. An impairment loss is recognized in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating units. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

15. Segment Reporting

16. Financial instruments

i) Non-derivative financial instruments

Non derivative financial instruments are classified as :

- Financial assets, measured at

(a) amortized cost and

(b) fair value through Profit and Loss (âFVTPLâ).

- Financial liabilities carried at amortized cost.

Initially, all financial instruments are recognized at their fair value. transaction costs are included in determining the carrying amount, if the financial instruments are not measured at FVTPL. Financial assets are derecognized when substantial risks and rewards of ownership of the financial asset have been transferred. In cases where substantial risks and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset. Financial liabilities are derecognized when contractual obligations are discharged or cancelled or expired.

Non-derivative financial assets are subsequently measured as below:

a. amortized cost

B. FVTPL category

Non-derivative financial liabilities are subsequently measured as below:

Subsequent to initial recognition, non - derivative financial liabilities are measured at amortised cost using the effective interest method.

17. cash and cash Equivalent

Mar 31, 2017

1. Basis of preparation of Financial Statements

a) Statement of Compliance

b) Basis of measurement

c) Functional and presentation currency

The financial statements are prepared in INR, which is the Companyâs functional currency.

d) Use of Estimates and Judgments

Critical estimates and judgements in applying accounting policies

Estimates and judgements made in applying accounting policies that have significant effect on the amounts recognized in the financial statements are as follows:

i) Revenue

The Company uses the percentage-of-completion method in accounting the revenue in respect of construction contracts. Use of the percentage-of-completion method requires the Company to estimate total contract revenue, and remaining cost to complete the contract at the end of each reporting date. The financial reporting of these contracts depends on estimates that are assessed continually during the term of these contracts, therefore recognized revenue and profit are subject to change as the contract progresses to completion.

ii) Property, plant and equipment

The charge in respect of periodic depreciation is derived after estimating the assetâs expected useful life and the expected residual value at the end of its life. The depreciation method, useful lives and residual values of Companyâs assets are estimated by management at the time the asset is acquired and reviewed during each financial year.

iii) Employee Benefit Plans

iv) Provisions and contingencies

Assessments undertaken in recognising provisions and contingencies have been made as per the best judgement of the management based on the current available information.

2. Property Plant & Equipment (PPE)

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any.

Depreciation on property, plant and equipment (other than those used abroad under contract) is charged on straight-line method as per the useful life prescribed in Schedule II of the Companies Act, 2013, except where estimated useful life is shorter based on technically assessed estimated useful life as shown hereunder:-

Property Plant & Equipment costing RS.10,000/- or less and those whose written down value as at the beginning of the year is RS.10,000/- or less, are depreciated fully.

Assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

Temporary structures are fully depreciated in the year of construction.

Significant components with different useful lives are accounted for and depreciated separately.

3. Leases

At the inception of an arrangement, the Company determines whether such an arrangement is or contains a lease.

Lease rentals arising under operating leases are recognized in the statement of profit or loss on a straight-line basis over the lease term except where the increment in lease rentals is in line with general rate of inflation.

4. Intangible assets

Intangible items costing more than RS.10000/- are evaluated for capitalization and are carried at cost less accumulated amortization and accumulated impairment, if any.

Intangible assets are amortised in Statement of Profit or Loss on a straight-line method over the estimated useful lives from the date that they are available for use. The estimated useful lives for the intangible assets are as follows:

Software 3 years

Others 10 years.

Intangible assets having WDV RS.10000/- or less at the beginning of the year are amortized fully.

Amortization period and amortization methods are reviewed in each financial year and changes, if any, are accounted for prospectively.

Expenditure on research activities is recognized in profit or loss as incurred. Expenditure on development activities is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the company intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs, if any.

Assets acquired for purposes of research and development are capitalized.

5. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are added to the cost of such assets.

An asset that necessarily takes a substantial period of time , considered as more than twelve months, to get ready for its intended use or sale is a qualifying asset for the purpose.

All other borrowing costs are recognized in the statement of profit or loss in the period in which they are incurred.

6. Investments in Subsidiaries & Joint ventures

Investments in subsidiaries and joint ventures are accounted at cost less impairment losses, if any.

If the intention of the management is to dispose the investment in near future, it is classified as held for sale and measured at lower of its carrying amount and fair value less costs to sell.

7. Inventories

8. Revenue Recognition

Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the entity and the amount of revenue can be measured reliably.

A. Construction Contracts

Revenue from construction contracts including long term service contracts are recognized using the âpercentage of completionâ method. Percentage of completion is determined based on contract costs incurred to date as a percentage of total estimated contract costs required to complete the contract.

B. Other than Construction Contracts

Other Income

- Dividend income is recognized in profit or loss on the date on which the Companyâs right to receive payment is established.

- Interest Income is recognized using effective interest rate method.

- Claims for export incentives/ duty drawbacks, duty refunds and insurance are accounted for on accrual basis.

9. Foreign currency Translation/Transaction

Transaction in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevailing at the date of transaction.

10. Employee Benefits

Defined contribution plans

The Companyâs contribution to Pension fund including Family Pension Fund for the employees is covered under defined contribution plan and is recognized as employee benefit expense in statement of profit or loss in the periods during which services are rendered by employees.

Defined benefit plans

The Companyâs gratuity scheme, provident fund scheme, travel claims on retirement and postretirement medical facility scheme are in the nature of defined benefit plans.

The liability recognized in the balance sheet in respect of these defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets,if any. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using an appropriate government bond rate that have terms to maturity approximating to the terms of the related liability.

Other expenses related to defined benefit plans are recognized in statement of profit or loss.

Long term Leave Liability

The Company measures the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period. Expense on nonaccumulating compensated absences is recognized in the period in which the absences occur. The Company records a liability for accumulated balance based on actuarial valuation determined using projected unit credit method. Remeasurements and other expenses related to long term benefit plans are recognized in statement of profit or loss.

11. Provisions

(iii) When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately.

However, where the effect of time value of money is material, provisions are determined and maintained by discounting the expected future cash flows, wherever applicable.

12. Government Grants

Government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Non monetary grants are accounted at Fair Value of assets and are treated as deferred income. Deferred income is recognized in the statement of profit or loss on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the statement of profit or loss over the periods necessary to match them with the related costs which they are intended to compensate.

13. Income Taxes

Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in statement of profit or loss except to the extent that it relates to items recognized in other comprehensive income or directly in equity.

Deferred tax is recognized using the balance sheet method, providing for temporary difference between the carrying amount of an asset or liability in the balance sheet and its tax base.

A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the temporary difference can be utilized.

The carrying amount of Deferred tax assets are reviewed at each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Additional Income tax that arise from the distribution of dividends are recognized at the same time when the liability to pay the related dividend is recognized.

14. Impairment of Assets

Impairment of financial assets

The loss allowance in respect of trade receivables and lease receivables are measured at an amount equal to lifetime expected credit losses.

Impairment of Non- Financial Assets

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

15. Segment Reporting

16. Financial Instruments

i) Non-derivative financial instruments

Non derivative financial instruments are classified as:

- Financial assets, measured at (a) amortized cost and (b) fair value through Profit and Loss (âFVTPLâ).

- Financial liabilities carried at amortized cost.

Non-derivative financial assets are subsequently measured as below:

A. Amortized cost -

âFinancial Instruments at amortized costâ are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is recognized in the profit or loss. The losses arising from impairment are recognized in the profit or loss.

B. FVTPL Category -

Financial instruments classified in this category are subsequently carried at fair value with changes recorded in the statement of profit or loss. Directly attributable transaction costs are recognised in P&L as incurred.

Non-derivative financial liabilities are subsequently measured as below:

Subsequent to initial recognition, non - derivative financial liabilities are measured at amortised cost using the effective interest method.

ii) Derivative financial instruments

Derivatives are recognized and measured initially at fair value. Attributable transaction cost are recognized in statement of profit or loss as cost. Subsequent to initial recognition, derivatives are measured at fair value through profit or loss.

17. Cash and Cash Equivalent

Mar 31, 2016

1 Basis of preparation of Financial Statements

The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 2013 as adopted consistently by the Company.

2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the income and expenditure during the reporting period and the assets and liabilities including contingent liabilities at the date of financial statements. The differences between actual results and estimates are recognized in the period in which results are known.

3 Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation and impairment, if any.

Cost includes value of internal transfers for capital works, taken at actual / estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation / revaluation in respect of long term liabilities / loans utilized for acquisition of fixed assets is added to / reduced from the cost.

Land acquired free of cost from the State Government is valued at Re.1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

4 Leases

FINANCE LEASE

A) (i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on ''Depreciation''. Against lease rentals, matching charge is made through Lease Equalisation Account.

Finance income is recognized over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognized as sales at normal sale price / fair value / NPV.

Finance income is recognized over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value / NPV / contracted price.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on ''Depreciation''. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

A) Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising there from is recognized as income over the lease period.

B) Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognized as expense over the lease period.

5 Intangible Assets

A) Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs.10,000/- Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro-rata monthly basis.

B) a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to Statement of profit and loss in the year of incurrence.

b. Expenditure incurred on Development including the expenditure during the development phase of Research & Development Project meeting the criteria as per Accounting Standard on Intangible Assets , is treated as intangible asset.

c. Fixed assets acquired for purposes of research and development are capitalised.

6 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognized as expense in the period in which they are incurred.

7 Depreciation

(i) Depreciation on fixed assets (other than those used abroad under contract) is charged upto the total cost of the assets on straight-line method as per the useful life prescribed in Schedule II of the Companies Act, 2013, except where estimated useful life is shorter based on technically assessed estimated useful life as shown hereunder:-

(Years)

General plant & machinery 12.5

Automatic/semi- automatic machines 10

Erection equipment, Capital tools & tackles 5

Railway sidings,Locomotives & wagons 12.5

Drainage, sewerage & water supply 30

Servers and networks 5

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Where useful life of a part of the asset (costing at least Rs.1 cr or 10% of the cost of the asset, whichever is higher) is different from the useful life of the remaining asset, useful life of that part is determined separately and depreciation charged accordingly.

(iii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iv) Fixed assets costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs.10,000/-.

(v) At erection/project sites: The cost of roads, bridges and culverts is fully amortized over the tenure of the contract, while sheds, railway sidings, electrical installations and other similar enabling works (other than temporary structures) are so depreciated after retaining 5% as residual value.

(vi) Temporary structures are fully depreciated in the year of construction.

(vii) Leasehold Land and Buildings are amortised over the period of lease. Buildings constructed on land taken on lease are depreciated over their useful life or the lease period, whichever is earlier.

8 Investments

(i) LongÂterm investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognized and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Statement of profit and loss .

9 Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/ estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) a) For Construction contracts entered into on or after 01.04.2003:

Where current estimates of cost and selling price of a contract indicates loss, the anticipated loss in respect of such contract is recognized immediately irrespective of whether or not work has commenced.

b) For all other contracts:

Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognized.

c) In arriving at the anticipated loss, total income including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased / manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

10 Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(i) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas-based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realizable value, they are considered at 97.5% of the realizable value or in its absence, quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of the realizable value, whichever is lower. The balance 2.5% is recognized as revenue on completion of supplies under the contract.

(ii) Income from erection and project management services is recognized on work done based on: Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non- BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

11 Accounting for Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise.

12 Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Monetary items are translated at the closing rate; non-monetary items carried at historical cost are translated at the rates in force on the date of the transaction; non-monetary items carried at fair value are translated at exchange rates that existed when the value were determined.

(iii) All translation variances are taken to Statement of Profit and Loss .

13 Employee Benefits

Provident Fund and Employees'' Family Pension Scheme contributions are accounted for on accrual basis. Liability for Earned Leave, Half Pay Leave, Gratuity, Travel claims on retirement and Post Retirement Medical Benefits are accounted for in accordance with actuarial valuation. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

14 Claims by/against the Company

(i) Claims for liquidated damages against the Company are recognized in accounts based on management''s assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

(ii) Claims for export incentives/duty drawbacks/ duty refunds and insurance claims etc. are taken into account on accrual.

(iii) Amounts due in respect of price escalation claims and/or variations in contract work are recognized as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customer H owe ve r, e s calation is restricted to intrinsic value.

15 Provision for Warranties

(i) For construction contracts entered into on or after 01.04.2003:

The company provides warranty cost at 2.5% of the revenue progressively as and when it recognises the revenue and maintain the same through the warranty period.

(ii) For all other contracts:

Provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) Warranty claims/ expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

16 Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognized as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

17 Taxes on income

Current tax is determined on the basis of taxable income in accordance with the provisions of the Income Tax Act, 1961. Deferred tax liability/ asset resulting from timing difference between accounting income and taxable income is recognized considering the tax rate and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax asset is accounted for and carried forward only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

18 Impairment

The carrying amount of cash generating units is reviewed at each balance sheet date where there is any indication of impairment . An impairment loss is recognized in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating units. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

19 Segment Reporting

Segment reporting is in line with the accounting policies of the company. Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue ,expenses, assets and liabilities which are not allocable to segments on a reasonable basis, are included under "Unallocated revenue/expenses/assets/ liabilities".

Mar 31, 2015

1 Basis of preparation of Financial Statements

The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 2013 as adopted consistently by the Company.

2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the income and expenditure during the reporting period and the assets and liabilities including contingent liabilities at the date of financial statements. The differences between actual results and estimates are recognized in the period in which results are known.

3 Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation and impairment, if any.

Cost includes value of internal transfers for capital works, taken at actual / estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation / revaluation in respect of long term liabilities / loans utilized for acquisition of fixed assets is added to / reduced from the cost.

Land acquired free of cost from the State Government is valued at Rs. 1/- except for that acquired after 16th July, 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

4 Leases

Finance Lease

A) (i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/ contracted price and treated as sales.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on Depreciation. Against lease rentals, matching charge is made through Lease Equalisation Account.

Finance income is recognized over the lease period.

(ii) Assets Given on Lease on or after 1st April, 2001

Assets manufactured and given on finance lease are recognized as sales at normal sale price / fair value/ NPV.

Finance income is recognized over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value / NPV / contracted price.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on Depreciation''. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

Operating Lease

A) Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising there from is recognized as income over the lease period.

B) Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognized as expense over the lease period.

5 Intangible Assets

A) Intangible assets are capitalised at cost if

a. It is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. The company will have control over the assets, and

c. The cost of these assets can be measured reliably and is more than Rs.10,000/- Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro-rata monthly basis.

B) a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to Statement of profit and loss in the year of incurrence.

b. Expenditure incurred on Development including the expenditure during the development phase of Research & Development Project meeting the criteria as per Accounting Standard on Intangible Assets , is treated as intangible asset.

c. Fixed assets acquired for purposes of research and development are capitalised.

6 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognized as expense in the period in which they are incurred.

7 Depreciation

(i) Depreciation on fixed assets (other than those used abroad under contract) is charged up to the total cost of the assets on straight-line method as per the useful life prescribed in Schedule II of the Companies Act, 2013, except where estimated useful life is shorter as shown hereunder:-

(Years)

General plant & machinery 12.5

Automatic/semi- automatic machines 10

Erection equipment, Capital tools & tackles 5

Railway sidings,Locomotives & wagons 12.5

Drainage, sewerage & water supply 30

Servers and networks 5

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Where useful life of a part of the asset (costing at least Rs. 1 Crore or 10% of the cost of the asset, whichever is higher) is different from the useful life of the remaining asset, useful life of that part is determined separately and depreciation charged accordingly.

(iii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iv) Fixed assets costing Rs. 10,000/- or less and those whose written down value as at the beginning of the year is Rs. 10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000/-.

(v) At erection/project sites: The cost of roads, bridges and culverts is fully amortized over the tenure of the contract, while sheds, railway sidings, electrical installations and other similar enabling works (other than temporary structures) are so depreciated after retaining 5% as residual value.

(vi) Temporary structures are fully depreciated in the year of construction.

(vii) Leasehold Land and Buildings are amortised over the period of lease. Buildings constructed on land taken on lease are depreciated over their useful life or the lease period, whichever is earlier.

8 Investments

(i) LongÂterm investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognized and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Statement of profit and loss.

9 Inventory Valuation

(i) Inventory is valued at actual/ estimated cost or net realisable value, whichever is l ower.

(ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) a) For Construction contracts entered into on or after 01.04.2003:

Where current estimates of cost and selling price of a contract indicates loss, the anticipated loss in respect of such contract is recognized immediately irrespective of whether or not work has commenced.

b) For all other contracts:

Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognized.

c) In arriving at the anticipated loss, total income including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased/ manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

10 Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred up to the reporting date to the total estimated cost of the contract.

B. For all other contracts

(i) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas-based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realizable value, they are considered at 97.5% of the realizable value or in its absence, quoted price.

Otherwise, they are considered at actual/ estimated factory cost or 97.5% of the realizable value, whichever is lower. The balance 2.5% is recognized as revenue on completion of supplies under the contract.

(ii) Income from erection and project management services is recognized on work done based on:

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non- BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

11 Accounting for Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise.

12 Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Monetary items are translated at the closing rate; non-monetary items carried at historical cost are translated at the rates in force on the date of the transaction; non-monetary items carried at fair value are translated at exchange rates that existed when the value were determined.

(iii) All translation variances are taken to Statement of Profit and Loss.

13 Employee Benefits

Provident Fund and Employees Family Pension Scheme contributions are accounted for on accrual basis. Liability for Earned Leave, Half Pay Leave, Gratuity, Travel claims on retirement and Post Retirement Medical Benefits are accounted for in accordance with actuarial valuation. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

14 Claims by/against the Company

(i) Claims for liquidated damages against the Company are recognized in accounts based on managements assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

(ii) Claims for export incentives / duty drawbacks / duty refunds and insurance claims etc. are taken into account on accrual.

(iii) Amounts due in respect of price escalation claims and/or variations in contract work are recognized as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

15 Provision for Warranties

(i) For construction contracts entered into on or after 01.04.2003:

The company provides warranty cost at 2.5% of the revenue progressively as and when it recognises the revenue and maintain the same through the warranty period.

(ii) For all other contracts:

Provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) Warranty claims / expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

16 Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognized as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

17 Taxes on Income

Current tax is determined on the basis of taxable income in accordance with the provisions of the Income Tax Act, 1961. Deferred tax liability/asset resulting from timing difference between accounting income and taxable income is recognized considering the tax rate and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax asset is accounted for and carried forward only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

18 Impairment

The carrying amount of cash generating units is reviewed at each balance sheet date where there is any indication of impairment . An impairment loss is recognized in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating units. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

19 Segment Reporting

Segment reporting is in line with the accounting policies of the company. Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue ,expenses, assets and liabilities which are not allocable to segments on a reasonable basis, are included under "Unallocated revenue/ expenses/assets/ liabilities".

Mar 31, 2014

1 Basis of preparation of Financial Statements

The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the income and expenditure during the reporting period and the assets and liabilities including contingent liabilities at the date of financial statements. The differences between actual results and estimates are recognised in the period in which results are known.

3 Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation and impairment, if any.

Cost includes value of internal transfers for capital works, taken at actual / estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/ revaluation in respect of long term liabilities/ loans utilised for acquisition of fixed assets is added to/ reduced from the cost.

Land acquired free of cost from the State Government is valued at Rs. 1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

4 Leases

Finance Lease

A) (i) Assets Given on Lease Prior to 1st April 2001 Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/ contracted price and treated as sales.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on ''Depreciation''. Against lease rentals, matching charge is made through Lease Equalisation Account.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April, 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price / fair value/ N PV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value / NPV / contracted price.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on ''Depreciation''. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

Operating Lease

A) Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

B) Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

5 Intangible Assets

A) Intangible assets are capitalised at cost if

a. It is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. The company will have control over the assets, and

c. The cost of these assets can be measured reliably and is more than Rs. 10,000/-. Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro-rata monthly basis.

B) a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to Statement of profit and loss in the year of incurrence.

b. Expenditure incurred on Development including the expenditure during the development phase of Research & Development Project meeting the criteria as per Accounting Standard on Intangible Assets, is treated as intangible asset.

c. Fixed assets acquired for purposes of research and development are capitalised.

6 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.

7 Depreciation

(i) Depreciation on fixed assets (other than

those used abroad under contract) is charged upto the total cost of the assets on straight-line method as per the rates prescribed in Schedule XIV of the Companies Act, 1956, except where depreciation is charged at rates determined on the basis of the technically assessed estimated useful lives shown hereunder:-

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs. 10,000/- or less and those whose written down value as at the beginning of the year is Rs. 10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000/-.

(iv) At erection/project sites: The cost of roads, bridges and culverts is fully amortized over the tenure of the contract, while sheds, railway sidings, electrical installations and other similar enabling works (other than purely temporary erections, wooden structures) are so depreciated after retaining 10% as residual value.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

(vi) Leasehold Land and Buildings are amortised over the period of lease. Buildings constructed on land taken on lease are depreciated over their useful life or the lease period, whichever is earlier.

8 Investments

(i) LongÂterm investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Statement of Profit and Loss.

9 Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is l ower.

(ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) (a) For Construction contracts entered into on or after 01.04.2003:

Where current estimates of cost and selling price of a contract indicates loss, the anticipated loss in respect of such contract is recognised immediately irrespective of whether or not work has commenced.

b) For all other contracts:

Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognised.

c) In arriving at the anticipated loss, total income including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased / manufactured against produc- tion orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

10 Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognised on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(i) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas-based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realizable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are considered at actual/ estimated factory cost or 97.5% of the realizable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

(ii) Income from erection and project management services is recognised on work done based on:

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognised as income when the contract is completed.

(iii) Income from engineering services rendered is recognised at realizable value based on percentage of work completed.

(iv) Income from supply/ erection of non- BHEL equipment/ systems and civil works is recognised based on dispatches to customer/work done at project site.

11 Accounting for Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.

12 Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Monetary items are translated at the closing rate; non-monetary items carried at historical cost are translated at the rates in force on the date of the transaction; non-monetary items carried at fair value are translated at exchange rates that existed when the value were determined.

(iii) All translation variances are taken to Statement of profit and loss.

13 Employee Benefits

Provident Fund and Employees'' Family Pension Scheme contributions are accounted for on accrual basis. Liability for Earned Leave, Half Pay Leave, Gratuity, Travel claims on retirement and Post Retirement Medical Benefits are accounted for in accordance with actuarial valuation. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

14 Claims by/against the Company

(i) Claims for liquidated damages against the Company are recognised in accounts based on management''s assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

(ii) Claims for export incentives / duty drawbacks/ duty refunds and insurance claims etc. are taken into account on accrual.

(iii) Amounts due in respect of price escalation claims and/or variations in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

15 Provision for Warranties

(i) For construction contracts entered into on or after 01.04.2003:

The company provides warranty cost at 2.5% of the revenue progressively as and when it recognises the revenue and maintain the same through the warranty period.

(ii) For all other contracts:

Provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) Warranty claims / expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

16 Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve.

Grants related to revenue, unless received as compensation for expenses / losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

17 Taxes on Income

Current tax is determined on the basis of taxable income in accordance with the provisions of the Income Tax Act, 1961. Deferred tax liability/asset resulting from timing difference between accounting income and taxable income is recognised considering the tax rate and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax asset is accounted for and carried forward only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

18 Impairment

The carrying amount of cash generating units is reviewed at each balance sheet date where there is any indication of impairment. An impairment loss is recognised in the Statement of Profit and Loss where the carrying amount exceeds the recoverable amount of the cash generating units. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

19 Segment Reporting

Segment reporting is in line with the accounting policies of the company. Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which are not allocable to segments on a reasonable basis, are included under "Unallocated revenue / expenses / assets / liabilities".

Mar 31, 2013

1 Basis of preparation of Financial Statements

The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2 Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the income and expenditure during the reporting period and the assets and liabilities including contingent liabilities at the date of financial statements. The differences between actual results and estimates are recognized in the period in which results are known.

3 Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation and impairment, if any.

Cost includes value of internal transfers for capital works, taken at actual / estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/ revaluation in respect of long term liabilities/ loans utilised for acquisition of fixed assets is added to / reduced from the cost.

Land acquired free of cost from the State Government is valued at Rs. 1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

4 Leases Finance Lease

A) (i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on ''Depreciation''. Against lease rentals, matching charge is made through Lease Equalisation Account.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April, 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price / fair value / NPV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value / NPV / contracted price.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on ''Depreciation''. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

Operating Lease

A) Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

B) Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

5 Intangible Assets

A) Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs. 10,000/. Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro-rata monthly basis.

B) a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to Statement of profit and loss in the year of incurrence.

b. Expenditure incurred on Development including the expenditure during the development phase of Research & Development Project meeting the criteria as per Accounting Standard on Intangible Assets, is treated as intangible asset.

c. Fixed assets acquired for purposes of research and development are capitalised.

6 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.

7 Depreciation

(i) Depreciation on fixed assets (other than those used abroad under contract) is charged upto the total cost of the assets on straight-line method as per the rates prescribed in Schedule XIV of the Companies Act, 1956, except where depreciation is charged at rates determined on the basis of the technically assessed estimated useful lives shown hereunder:-

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs. 10,000/- or less and those whose written down value as at the beginning of the year is Rs. 10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000/-.

(iv) At erection/project sites: The cost of roads, bridges and culverts is fully amortized over the tenure of the contract, while sheds, railway sidings, electrical installations and other similar enabling works (other than purely temporary erections, wooden structures) are so depreciated after retaining 10% as residual value.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

(vi) Leasehold Land and Buildings are amortised over the period of lease. Buildings constructed on land taken on lease are depreciated over their useful life or the lease period, whichever is earlier.

8 Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Statement of profit and loss .

9 Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) (a) For Construction contracts entered into on or after 01.04.2003:

Where current estimates of cost and selling price of a contract indicates loss, the anticipated loss in respect of such contract is recognised immediately irrespective of whether or not work has commenced.

b) For all other contracts:

Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognised.

c) In arriving at the anticipated loss, total income including incentives on exports/ deemed exports is taken into consideration.

(vi) The components and other materials purchased / manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

10 Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(i) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas-based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realizable value, they are considered at 97.5% of the realizable value or in its absence, quoted price. Otherwise, they are considered at actual/ estimated factory cost or 97.5% of the realizable value, whichever is lower. The balance 2.5% is recognized as revenue on completion of supplies under the contract.

(ii) Income from erection and project manage-ment services is recognized on work done based on: Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/ erection of non- BHEL equipment/ systems and civil works is recognized based on dispatches to customer/work done at project site.

11 Accounting for Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise.

12 Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Monetary items are translated at the closing rate; non-monetary items carried at historical cost are translated at the rates in force on the date of the transaction; non-monetary items carried at fair value are translated at exchange rates that existed when the value were determined.

(iii) All translation variances are taken to Statement of profit and loss .

13 Employee Benefits

Provident Fund and Employees'' Family Pension Scheme contributions are accounted for on accrual basis. Liability for Earned Leave, Half Pay Leave, Gratuity, Travel claims on retirement and Post Retirement Medical Benefits are accounted for in accordance with actuarial valuation. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

14 Claims by/against the Company

(i) Claims for liquidated damages against the Company are recognised in accounts based on management''s assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

(ii) Claims for export incentives / duty drawbacks/ duty refunds and insurance claims etc. are taken into account on accrual.

(iii) Amounts due in respect of price escalation claims and/or variations in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

15 Provision for Warranties

(i) For construction contracts entered into on or after 01.04.2003:

The company provides warranty cost at 2.5% of the revenue progressively as and when it recognises the revenue and maintain the same through the warranty period.

(ii) For all other contracts:

Provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) Warranty claims / expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

16 Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compen- sation for expenses/losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

17 Taxes on Income

Current tax is determined on the basis of taxable income in accordance with the provisions of the Income Tax Act, 1961. Deferred tax liability/ asset resulting from timing difference between accounting income and taxable income is recognised considering the tax rate and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax asset is accounted for and carried forward only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets.

18 Impairment

The carrying amount of cash generating units is reviewed at each balance sheet date where there is any indication of impairment. An impairment loss is recognised in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating units. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

19 Segment Reporting

Segment reporting is in line with the accounting policies of the company. Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue ,expenses, assets and liabilities which are not allocable to segments on a reasonable basis, are included under "Unallocated revenue/ expenses/ assets/ liabilities.

Mar 31, 2012

1 Basis of preparation of Financial Statements

The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2 Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual / estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation / revaluation in respect of long term liabilities / loans utilised for acquisition of fixed assets is added to / reduced from the cost.

Land acquired free of cost from the State Government is valued at Rs.1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

3 Leases Finance Lease

A) (i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales. Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on 'Depreciation'. Against lease rentals, matching charge is made through Lease Equalisation Account.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price / fair value / NPV Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value / NPV / contracted price.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on 'Depreciation'. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

Operating Lease

A) Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

B) Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

4 Intangible Assets

A) Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs. 10,000/-. Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro- rata monthly basis.

B) a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to statement of profit and loss account in the year of incurrence.

b. Expenditure incurred on Development including the expenditure during the development phase of Research & Development Project meeting the criteria as per Accounting Standard on Intangible Assets, is treated as intangible asset.

c. Fixed assets acquired for purposes of research and development are capitalised.

5 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.

6 Depreciation

(i) Depreciation on fixed assets (other than those used abroad under contract) is charged upto the total cost of the assets on straight-line method as per the rates prescribed in Schedule XIV of the Companies Act, 1956, except where depreciation is charged at rates determined on the basis of the technically assessed estimated useful lives shown hereunder:-

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro- rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs. 10,000/- or less and those whose written down value as at the beginning of the year is Rs. 10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000/-.

(iv) At erection/project sites: The cost of roads, bridges and culverts is fully amortized over the tenure of the contract, while sheds, railway sidings, electrical installations and other similar enabling works (other than purely temporary erections, wooden structures) are so depreciated after retaining 10% as residual value.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

(vi) Leasehold Land and Buildings are amortised over the period of lease. Buildings constructed on land taken on lease are depreciated over their useful life or the lease period, whichever is earlier.

7 Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties. Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Statement of Profit & Loss.

8 Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) (a) For Construction contracts entered into on or after 01.04.2003:

Where current estimates of cost and selling price of a contract indicates loss, the anticipated loss in respect of such contract is recognised immediately irrespective of whether or not work has commenced.

b) For all other contracts:

Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognised.

c) In arriving at the anticipated loss, total income including incentives on exports/ deemed exports is taken into consideration.

(vi) The components and other materials purchased / manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

9 Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 01.04.2003 :

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(i) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas-based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realizable value, they are considered at 97.5% of the realizable value or in its absence, quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of the realizable value, whichever is lower. The balance 2.5% is recognized as revenue on completion of supplies under the contract.

(ii) Income from erection and project management services is recognized on work done based on:Percentage of completion; or The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non- BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

10 Accounting for Foreign Currency Transactions

11 Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Monetary items are translated at the closing rate; non-monetary items carried at historical cost are translated at the rates in force on the date of the transaction; non-monetary items carried at fair value are translated at exchange rates that existed when the value were determined.

(iii) All translation variances are taken to Profit & Loss Account.

12 Employee Benefits

Provident Fund and Employees' Family Pension Scheme contributions are accounted for on accrual basis. Liability for Earned Leave, Half Pay Leave, Gratuity, Travel claims on retirement and Post Retirement Medical Benefits are accounted for in accordance with actuarial valuation. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

13 Claims by/against the Company

(i) Claims for liquidated damages against the Company are recognised in accounts based on management's assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

(ii) Claims for export incentives / duty drawbacks / duty refunds and insurance claims etc. are taken into account on accrual.

(iii) Amounts due in respect of price escalation claims and/or variations in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

14 Provision for Warranties

(i) For construction contracts entered into on or after 01.04.2003:

The company provides warranty cost at 2.5% of the revenue progressively as and when it recognises the revenue and maintain the same through the warranty period.

(ii) For all other contracts:

Provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) Warranty claims/ expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

15 Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 2011

1 Basis of preparation of Financial Statements

2 Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Land acquired free of cost from the State Government is valued at e.1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

3 Leases

FINANCE LEASE

A) (i) Assets Given on Lease Prior to 1st April 2001

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price / fair value / NPV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value / NPV / contracted price.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

A) Assets Given on Lease

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

B) Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

4 Intangible Assets

A) Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than R 10,000/- Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro- rata monthly basis.

B) a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to profit and loss account in the year of incurrence.

c. Fixed assets acquired for purposes of research and development are capitalised.

5 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.

6 Depreciation

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing s.10,000/- or less and those whose written down value as at the beginning of the year is s.10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of s.10,000/-.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

7 Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

8 Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) (a) For Construction contracts entered into on or after 01.04.2003:

b) For all other contracts:

c) In arriving at the anticipated loss, total income including incentives on exports/ deemed exports is taken into consideration.

(vi) The components and other materials purchased / manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

9 Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 01.04.2003 : Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(ii) Income from erection and project management services is recognized on work done based on: Percentage of completion; or The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non- BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

10 Accounting for Foreign Currency Transactions

11 Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(iii) All translation variances are taken to Profit & Loss Account.

12 Employee Benefits

Provident Fund and Employees' Family Pension Scheme contributions are accounted for on accrual basis. Liability for Earned Leave, Half Pay Leave, Gratuity, Travel claims on retirement and Post Retirement Medical Benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

13 Claims by/against the Company

(ii) Claims for export incentives / duty drawbacks / duty refunds and insurance claims etc. are taken into account on accrual.

14 Provision for Warranties

(i) For construction contracts entered into on or after 01.04.2003:

The company provides warranty cost at 2.5% of the revenue progressively as and when it recognises the revenue and maintain the same through the warranty period.

(ii) For all other contracts:

(iii) Warranty claims/ expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

15 Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 2010

1. Basis of preparation of Financial Statements

2 Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Land acquired free of cost from the State Government is valued at Re.1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

3 Leases

FINANCE LEASE

A) i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on Depreciation. Against lease rentals, matching charge is made through Lease Equalisation Account.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price / fair value / NPV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value / NPV / contracted price.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on Depreciation. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

4 Intangible Assets

A. Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs. 10,000/-

Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro- rata monthly basis.

B a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is

charged to profit and loss account in the year of incurrence.

c. Fixed assets acquired for purposes of research and development are capitalised.

5 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.

6 Depreciation

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

7 Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

8 Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(ii) Finished goods in Plant and work-in - progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) a) For Construction contracts entered into on or after 01.04.2003:

b) For all other contracts:

c) In arriving at the anticipated loss, total income including incentives on exports/ deemed exports is taken into consideration

(vi) The components and other materials purchased / manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

9 Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(ii) Income from erection and project management services is recognized on work done based on:Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non- BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

10 Accounting for Foreign Currency Transactions

11 Translation of Financial

Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(iii) All translation variances are taken to Profit & Loss Account.

12 Employee Benefits

Earned leave, half pay leave, Provident Fund and Employees Family Pension Scheme contributions are accounted for on accrual basis. Liability for gratuity, travel claims on retirement and post retirement medical benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

13 Claims by/against the Company

(i) Claims for liquidated damages against the Company are recognised in accounts based on managements assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

(ii) Claims for export incentives / duty drawbacks / duty refunds and insurance claims etc. are taken into account on accrual.

14 Provision for Warranties

i) For construction contracts entered into on or after 01.04.2003:

Provision for contractual obligations is maintained at 2.5% of the contract value on completion of trial operation.

ii) For all other contracts:Provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) Warranty claims/ expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

15 Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 2009

1. Basis of preparation of Financial Statements

2 Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Land acquired free of cost from the State Government is valued at Re.1/- except for that acquired after 16" July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

3 Leases

FINANCE LEASE

A) i) Assets Given on Lease Prior to 1s April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price/fair value/NPV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1s April 2001

Assets taken on lease are capitalised at fair value / NPV/ contracted price.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income overthe lease period.

Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

4 Intangible Assets

A. Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs.10,000/-

B. a. Expenditure on research including the

expenditure during the research phase of Research & Development Projects is

charged to profit and loss account in the year of incurrence.

c. Fixed assets acquired for purposes of research and development are capitalised.

5 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurrence

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs. 10,000/- or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000/-.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

6 Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

7 Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(iii In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) a) For Construction contracts entered into on or afterOI .04.2003:

b) For all other contracts:

c) In arriving at the anticipated loss, total income including incentives on exports/ deemed exports is taken into consideration.

(vi) The components and other materials purchased / manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

8 Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

are considered at 97.5% of the realizable value or in its absence, quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of the realizable value, whichever is lower. The balance 2.5% is recognized as revenue on completion of supplies under the contract.

(ii) Income from erection and project management services is recognized on work done based on:

Percentageof completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non-BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

9 Accounting for Foreign Currency Transactions

10 Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(iii) All translation variances are taken to Profit & Loss Account.

11 Employee Benefits

Earned leave, half pay leave, Provident Fund and Employees Family Pension Scheme contributions

are accounted for on accrual basis. Liability for gratuity, travel claims on retirement and post retirement medical benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

12 Claims by/against the Company

(ii) Claims for export incentives / duty drawbacks / duty refunds and insurance claims etc. are taken into account on accrual.

13 Provision for Warranties

i) For construction contracts entered into on or after 01.04.2003: Provision for contractual obligations is maintained at 2.5% of the contract value on completion of trial operation.

ii) For all other contracts:

(iii) Warranty claims/ expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

14 Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/ Ã losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 2008

1. Basis of preparation of Financial Statements

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/ estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation / revaluation in respect of long term liabilities / loans utilised for acquisition of fixed assets is added to / reduced from the cost.

3. Leases

FINANCE LEASE

A) i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price / fair value / NPV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value / NPV / contracted price. Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on Depreciation, If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease

OPERATING LEASE

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

4. Intangible Assets

A. Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs.10,000/-.

B. a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to profit and loss account in the year of incurrence.

c. Fixed assets acquired for purposes of research and development are capitalised.

5 Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.

6. Depreciation

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs.10,000/-or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000/-.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

7. Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

8. Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) a) For Construction contracts entered into on or after 01.04.2003: Where current estimates of cost and selling price of a contract indicates loss, the anticipated loss in respect of such contract is recognised immediately irrespective of whether or not work has commenced.

b) For all other contracts:

c) In arriving at the anticipated loss, total income including incentives on exports/ deemed exports is taken into consideration.

(vi) The components and other materials purchased/manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

9. Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(ii) Income from erection and project management services is recognized on work done based on:

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non- BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

10. Accounting for Foreign Curency

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(iii) All translation variances are taken to Profit & Loss Account.

12. Employee Benefit

(ii) Claims for export incentives/duty drawbacks/ duty refunds and insurance claims etc. are taken into account on accrual.

14. Provision for Warranties

i) For construction contracts entered into on or after 01.04.2003:

Provision for contractual obligations is maintained at 2.5% of the contract value on completion of trial operation.

ii) For all other contracts:

(iii) Warranty claims/ expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 2007

1. Basis of preparation of Financial Statements

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets is added to/reduced from the cost. Land acquired free of cost from the State Government is valued at Re.1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

3. Leases

FINANCE LEASE

A) I) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales. Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on `Depreciation'. Against lease rentals, matching charge is made through Lease Equalisation Account. Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price/fair value/NPV. Finance income is recognised over the lease period.Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value/NPV/contracted price.Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on `Depreciation'. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter;Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

4. Intangible Assets

A. Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs.10,000/- intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro-rata monthly basis. B. a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to profit and loss account in the year of incurrence.

c. Fixed assets acquired for purposes of research and development are capitalised.

5. Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets. A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.Other borrowing costs are recognised as expense in the period in which they are incurred.

6. Depreciation

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 16% Automatic/Semi-Automatic Machines 10% 15% 20% Erection Equipment, Capital Tools & Tackles 20% Township Buildings - Second Class 2.5% - Third Class 3.5% Railway Sidings 8% Locomotives & Wagons 8% Electrical Installations 8% Office & Other Equipments 8% Drainage, Sewerage & Water supply 3.34% Electronic Data Processing Equipment 20%

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs, 10,0007- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs.10,000/-.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction

(vi) Leasehold land and Buildings are amortised over the period of lease. Buildings constructed on land taken on lease are depreciated over their useful life or the lease period, whichever is earlier.

(vii) Where the carrying amount on any fixed assets has undergone a change in accordance with the policy for Foreign Currency Transactions, the depreciation on the unamortised depreciable asset is spread over the residual useful life of the asset.

7. Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

8. Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

b) For all other contracts: Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognised, c) In arriving at the anticipated loss, total income including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased 7 manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

9. Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003. Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(ii) Income from erection and project management services is recognized on work done based on: Percentage of completion; or The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognised as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non-BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

10. Accounting for Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise, except in respect of the liabilities for the acquisition of fixed assets from outside India, where such exchange difference is adjusted in the carrying cost of fixed assets.

11. Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(iii) All translation variances except in relation to fixed assets are taken to Profit & Loss Account.

12. Employee Benefits

Earned leave, half pay leave, Provident Fund and Employees' Family Pension Scheme contributions are accounted for on accrual basis. Liability for gratuity, travel claims on retirement and post retirement medical benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year. Compensation under Voluntary Retirement Scheme is charged off in the year of incurrence on a pro-rata monthly basis.

13. Claims by/against the Company

(ii) Claims for export incentives/duty drawbacks/duty refunds and insurance claims etc. are taken into account on accrual.

14. Provision for Warranties

i) For construction contracts entered into on or after 01.04.2003 : Provision for contractual obligations is maintained at 2.5% of the contract value on completion of trial operation.

ii) For all other contracts : Provision for contractual obligations in respect of contracts under warranty at the year end is maintained at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided,

(iii) Warranty claims/expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

15. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.Grants related to fixed depreciable assets are adjusted against the grossvcost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue.Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 2006

1. The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets is added to/reduced from the cost.

3. Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.

4. Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower.

5. Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(ii) Income from erection and project management services is recognized on work done based on : Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non-BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

6. Leases

FINANCE LEASE

A) i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales. Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on `Depreciation'. Against lease rentals, matching charge is made through Lease Equalisation Account. Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price/fair value/NPV. Finance income is recognised over the lease period. Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value/NPV/contracted price.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on `Depreciation'. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

7. Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) a) For Construction contracts entered into on or after 01.04.2003:

b) For all other contracts:

c) In arriving at the anticipated loss, total income including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased/manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

8. Terminal Benefits

A) Provident Fund and Employees' Family Pension Scheme contributions are accounted for on accrual basis. Liability for gratuity, half pay leave, leave encashable at the time of retirement, travel claims on retirement and post retirement medical benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year.

B. Compensation under Voluntary Retirement Scheme before 1.4.2003 are treated as Deferred Revenue Expenditure and amortised over the period during which the benefits are expected to be derived by the Company.

Compensation under VRS after 1.4.2003 is charged off in the year of incurrence on a pro-rata monthly basis.

9. Depreciation

Single Double Triple Shift Shift Shift

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs.10,000/-.

(iv) At erection/project sites: The cost of roads, bridges and culverts is fully amortized over the tenure of the contract, while sheds, railway sidings, electrical installations and other similar enabling works (other-than purely temporary erections, wooden structures) are so depreciated after retaining 10% as residual value.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

10. Intangible Assets

A. Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs.10,000/- Intangible assets are amortised over their estimated useful lives not exceeding three years in case of software and not exceeding ten years in case of others on a straight line pro-rata monthly basis.

B. a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to profit and loss account in the year of incurrence.

c. Fixed assets acquired for purposes of research and development are capitalised.

11. Claims by/against the Company

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

12. Accounting for Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise, except in respect of the liabilities for the acquisition of fixed assets, where such exchange difference is adjusted in the carrying cost of fixed assets.

13. Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(iii) All translation variances except in relation to fixed assets are taken to Profit & Loss Account.

14. Provision for Warranties

i) For construction contracts entered into on or after 01.04.2003:

Provision for contractual obligations is maintained at 2.5% of the contract value on completion of trial operation.

ii) For all other contracts:

(iii) Warranty claims/expenses on rectification work are accounted for against natural.heads as and when incurred and charged to provisions in the year end.

15. Government Grants

Mar 31, 2005

1. The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets is added to/reduced from the cost.

3. Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale.

Other borrowing costs are recognised as expense in the period in which they are incurred.

4. Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

5. Revenue Recognition

Sales are recorded1 based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment.

A. For construction contracts entered into on or after 1.4.2003.

Revenue is recognized on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts

(ii) Income from erection and project management services is recognized on work done based on : Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognized as income when the contract is completed.

(iii) Income from engineering services rendered is recognized at realizable value based on percentage of work completed.

(iv) Income from supply/erection of non-BHEL equipment/systems and civil works is recognized based on dispatches to customer/work done at project site.

6. Leases

FINANCE LEASE

A) i) Assets Given on Lease Prior to 1s1 April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on `Depreciation'. Against lease rentals, matching charge is made through Lease Equalisation Account.

Finance income is recognised over the lease period,

(ii) Assets Given on Lease on or alter 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price/fair value/NPV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value/NPV/contracted price.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

Assets Taken on Lease : Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

7. Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) a) For Construction contracts entered into on or after 01.04.2003:

b) For all other contracts:

Where current estimates of cost and setting price of an individually Identified project loaning part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognised.

c) In arriving at the anticipated loss, total income including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased/manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

8. Terminal Benefits

Compensation under VRS after 1.4,2003 is charged off in the year of incurrence on a pro-rata monthly basis.

9. Depreciation

Single Double Triple Shift Shift Shirt

General Plant & Machinery 8% 12% 16% Automatic/Semi Automatic Machines 10% 15% 20% Erection Equipment, Capital Tools &Tackles 20% Township Buildings - Second Class 2.5% - Third Class 3.5% Railway Sidings 8% Locomotives & Wagons 8% Electrical Installations 8% Office & Other Equipments 8% Drainage, Sewerage & Water supply 3.34% Electronic Data Processing Equipment 20%

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs.10,000/-.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

10. Intangible Assets

A. Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs.10,000/-.

B. a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to profit and loss account in the year of incurrence.

c. Fixed assets acquired for purposes of research and development are capitalised.

11. Claims by/against the Company

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

12. Accounting for Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise, except in respect of the liabilities for the acquisition of fixed assets, where such exchange difference is adjusted in the carrying cost of fixed assets.

13. Translation of Financial Statements of Integral Foreign Operations

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(iii) All translation variances except in relation to fixed assets are taken to Profit & Loss Account.

14. Provision for Warranties

i) For construction contracts entered into on or after 01.04.2003:

Provision for contractual obligations is maintained at 2.5% of the contract value on completion of trial operation,

ii) For all other contracts:

(iii) Warranty claims/expenses on rectification work are accounted for against natural heads as and when incurred and charged to provisions in the year end.

15. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 2004

1. The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets is added to/reduced from the cost.

3. Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

A qualifying asset is one that necessarily takes more than twelve months to get ready for intended use or sale. Other borrowing costs are recognised as expense in the period in which they are incurred.

4. Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

5. Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods dispatched to customers by partial shipment which are billed or unbilled pending formal billing.

A. For construction contracts entered into on or after 1.4.2003

Revenue is recognised on percentage completion method based on the percentage of actual cost incurred upto the reporting date to the total estimated cost of the contract.

B. For all other contracts :

(i) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas-based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of the realisable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

(ii) Income from erection and project management services is recognised on work done and billed based on:

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognised as income when the contract is completed.

(iii) Income from engineering services rendered is recognised at realisable value based on the certified percentage of work completed and billed.

(iv) Income from supply/erection of non-BHEL equipment/systems and civil works is recognised based on dispatches to customer/work done at project site.

6. Leases

Finance Lease

A) i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price/fair value/NPV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value/NPV/contracted price.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

Operating Lease

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

7. Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) a) For Construction contracts entered into on or after 01.04.2003:

b) For all other contracts:

c) In arriving at the anticipated loss, total income including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased/manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

8. Terminal Benefits

B) Lump sum payments made under Voluntary Retirement Scheme before 1.4.2003 are treated as

Deferred Revenue Expenditure and amortised over the period during which the benefits are expected to be derived by the Company.

Lump sum payments made under VRS after 1.4.2003 will be charged off in the year of payment on a pro-rata monthly basis.

9. Depreciation

(i) Depreciation on fixed assets (other than those used abroad under contract) is charged on straight-line method as per the rates prescribed in Schedule XIV of the Companies Act, 1956, except where depreciation is charged at rates shown hereunder:-

Single Double Triple Shift Shift Shift

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs.10,000/-.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

10. Intangible Assets

A. Intangible assets are capitalised at cost if

a. it is probable that the future economic benefits that are attributable to the asset will flow to the company, and

b. the company will have control over the assets, and

c. the cost of these assets can be measured reliably and is more than Rs.10,000/-

B. a. Expenditure on research including the expenditure during the research phase of Research & Development Projects is charged to profit and loss account in the year of incurrence.

c. Fixed assets acquired for purposes of research and development are capitalised.

11. Claims by/against the Company

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

12. Accounting for Foreign Currency Transactions

Exchange differences arising out of Foreign Currency Transactions are recognised as income or as expense in the period in which they arise.

Adjustment of exchange differences to the carrying amount of fixed assets are made as under:

a. For any increase/decrease in the liabilities related to fixed assets acquired in foreign currency due to translation;

b. On repayment of liabilities incurred for the purpose of acquiring fixed assets.

The effect of past extraordinary and permanent fluctuations in the exchange rate including on devaluation/revaluation other than those related to fixed assets, are treated as deferred revenue charge and adjusted over the residual period of such liabilities.

13. Translation of Financial Statements of Foreign Branches

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Current assets and current liabilities are translated at the closing rate, while fixed assets are translated at the rates in force when the transactions take place.

(iii) All translation variances except in relation to fixed assets are taken to Profit & Loss Account.

14. Provision for Warranties

i) For construction contracts entered into on or after 01.04.2003:

Provision for contractual obligations is considered on completion of trial operation at 2.5% of the contract value.

ii) For all other contracts:

Provision for contractual obligations in respect of contracts under warranty at the year end is considered at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

(iii) Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

15. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 2003

1. The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

3. Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

4. Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

5. Revenue Recognition

(i) Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods despatched to customers by partial shipment which are billed or unbilled pending formal billing.

(ii) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are .considered at actual/estimated factory cost or 97.5% of the realisable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

(iii) Income from erection and project management services is recognised on work done and billed based on :

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognised as income when the contract is completed.

(iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of work completed and billed.

(v) Income from supply/erection of non-BHEL equipment/systems and civil works is recognised based on despatches to customer/work done at project site.

6. Leases

FINANCE LEASE

A) i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price/fair value/NPV.

Finance income is recognised over the lease period. Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value/NPV/contracted price.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

7. Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/ estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/ estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(v) Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognised. In arriving at this loss, total income from the project including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased/manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

8. Terminal Benefits

Provident Fund and Employees' Family Pension Scheme contributions are accounted for on accrual basis.

Liability for gratuity, half pay leave, leave encashable at the time of retirement, travel claims on retirement and post retirement medical benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year.

9. Depreciation

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 16%

Automatic/Semi - Automatic Machines 10% 15% 20%

Erection Equipment, Capital Tools &Tackles 20%

Township Buildings

- Second Class 2.5%

- Third Class 3.5%

Railway Sidings 8%

Locomotives & Wagons 8%

Electrical Installations 8%

Office & Other Equipments 8%

Drainage, Sewerage & Water supply 3.34%

Electronic Data Processing Equipment 20%

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs.10,000/-.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

10. Research and Development Expenditure

Research and development expenditure is charged to profit and loss account in the year of incurrence. Fixed assets acquired for purposes of research and development are capitalised.

11. Claims by/against the Company

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

12. Accounting for Foreign Currency Transactions

Exchange differences arising out of Foreign Currency Transactions are recognised as income or as expense in the period in which they arise.

Adjustment of exchange differences to the carrying amount of fixed assets are made as under:

a. For any increase/decrease in the liabilities related to fixed assets acquired in foreign currency due to translation;

b. On repayment of liabilities incurred for the purpose of acquiring fixed assets.

The effect of past extraordinary and permanent fluctuations in the exchange rate including on devaluation/ revaluation other than those related to fixed assets, are treated as deferred revenue charge and adjusted over the residual period of such liabilities.

13. Translation of Financial Statements of Foreign Branches

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Current assets and current liabilities are translated at the closing rate, while fixed assets are translated at the rates in force when the transactions take place.

(iii) All translation variances except in relation to fixed assets are taken to Profit & Loss Account.

14. Provision for Warranties

(i) Provision for contractual obligations in respect of contracts under warranty at the year end is considered at 2.5% of the value of contract. In the case of contracts for supply of more than a single product, 2.5% of the value of each completed product is provided.

(ii) Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

15. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

16. Deferred Revenue Expenditure

Lump sum payments made under Voluntary Retirement Scheme are treated as Deferred Revenue Expenditure and amortised over the period during which the benefits are expected to be derived by the Company.

3. Land and buildings include:

a) 15126.667 acres of land (previous year 15154.997 acres), 52 flats (previous year 79 flats) and one building (previous year one building) for which formal transfer/lease deeds have not been executed including for 101.520 acres of land (previous year 101.520 acres) for which the cost paid is provisional; registration charges and stamp duty net of provision already made thereon ,would be accounted for on payment.

b) 94.936 acres of land (previous year 94.936 acres) leased to Ministry of Defence, Government Departments and others.

c) 180 acres of land including 100 acres given on licence valid upto 30th November, 1990 (previous year 180 acres and 100 acres respectively) being used by the Ministry of Defence and for which further approval of the competent authority for continuance of licensing of this land is awaited.

d) 209.507 acres (previous year 209.507 acres) of land is under adverse possession.

4. The impact on the profit of providing 100 percent depreciation on fixed assets upto Rs.10000/- each, without considering such impact of earlier years, is as under:

Mar 31, 2002

1. The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets is added to/reduced from the cost.

Land acquired free of cost from the State Government is valued at Re. 1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

3. Borrowing Costs

Borrowing costs that are attributable to the manufacture, acquisition or construction of qualifying assets, are included as part of the cost of such assets.

4. Investments

(i) Long-term investments are carried at cost. Decline, other than temporary, in the value of such investments, is recognised and provided for.

(ii) Current investments are carried at cost or quoted/fair value whichever is lower. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

Any reduction in the carrying amount and any reversals of such reductions are charged or credited to the Profit & Loss Account.

5. Revenue Recognition

(ii) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas-based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of the realisable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

(iii) Income from erection and project management services is recognised on work done and billed based on: Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance 2.5% is recognised as income when the contract is completed.

(iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of work completed and billed.

(v) Income from supply/erection of non-BHEL equipment/systems and civil works is recognised based on despatches to customer/work done at project site.

6. Leases

FINANCE LEASE

A) i) Assets Given on Lease Prior to 1st April 2001

Assets manufactured and given on finance lease are capitalised at the normal sale price/fair value/contracted price and treated as sales.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on `Depreciation. Against lease rentals, matching charge is made through Lease Equalisation Account.

Finance income is recognised over the lease period.

(ii) Assets Given on Lease on or after 1st April 2001

Assets manufactured and given on finance lease are recognised as sales at normal sale price/fair value/NPV.

Finance income is recognised over the lease period.

Initial direct costs are expensed at the commencement of lease.

B) Assets Taken on Lease on or after 1st April 2001

Assets taken on lease are capitalised at fair value/NPV/contracted price.

Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy on `Depreciation. If the lease assets are returnable to the lessor on expiry of lease period, the same is depreciated over its useful life or lease period, whichever is shorter.

Lease payments made are apportioned between finance charges and reduction of outstanding liability in relation to assets taken on lease.

OPERATING LEASE

Assets Given on Lease:

Assets manufactured and given on operating lease are capitalised. Lease income arising therefrom is recognised as income over the lease period.

Assets Taken on Lease:

Lease payments made for assets taken on operating lease are recognised as expense over the lease period.

7. Inventory Valuation

(i) Inventory is valued at actual/estimated cost or net realisable value, whichever is lower.

(ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas-based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) In respect of valuation of finished goods in plant and work-in-progress, cost means factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iv) In respect of raw material, components, loose tools, stores and spares cost means weighted average cost.

(vi) The components and other materials purchased/manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

8. Terminal Benefits

Provident Fund and Employees Family Pension Scheme contributions are accounted for on accrual basis. Liability for gratuity, half pay leave, leave encashable at the time of retirement and post retirement medical benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year.

9. Depreciation

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 16%

Automatic/Semi-Automatic Machines 10% 15% 20%

Erection Equipment, Capital Tools & Tackles 20%

Township Buildings

- Second Class 2.5%

-Third Class 3.5%

Railway Sidings 8%

Locomotives & Wagons 8%

Electrical Installations 8%

Office & Other Equipments 8%

Drainage, Sewerage & Water supply 3.34%

Electronic Data Processing Equipment 20%

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

(vii) Where the carrying amount on any fixed assets has undergone a change in accordance with the policy for

Foreign Currency Transactions, the depreciation on the unamortised depreciable asset is spread over the residual useful life of the asset.

10. Research and Development Expenditure

Research and development expenditure is charged to profit and loss account in the year of incurrence. Fixed assets acquired for purposes of research and development are capitalised.

11. Claims by/against the Company

(i) Claims for liquidated damages by/against the Company are recognised in accounts on acceptance.

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

12. Accounting for Foreign Currency Transactions

Exchange differences arising out of Foreign Currency Transactions are recognised as income or as expense in the period in which they arise.

Adjustment of exchange differences to the carrying amount of fixed assets are made as under:

a. For any increase/decrease in the liabilities related to fixed assets acquired in foreign currency due to translation;

b. On repayment of liabilities incurred for the purpose of acquiring fixed assets.

13. Translation of Financial Statements of Foreign Branches

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Current assets and current liabilities are translated at the closing rate, while fixed assets are translated at the rates in force when the transactions take place.

(iii) All translation variances except in relation to fixed assets are taken to Profit & Loss Account.

14. Provision for Warranties

(ii) Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

15. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

16. Deferred Revenue Expenditure

Lump sum payments made under Voluntary Retirement Scheme are treated as Deferred Revenue Expenditure and amortised over the period during which the benefits are expected to be derived by the Company.

Mar 31, 2001

1. The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Interest costs incurred on the funds borrowed specifically for projects and identified therewith are capitalised upto the time of commissioning of the relevant projects.

3. Investments

i. Long-term investments, are carried at cost. Permanent decline in the value of such investments is recognised and provided for.

ii. Current investments are carried at lower of cost and quoted/fair value. Unquoted current investments are carried at cost.

iii. The cost of investment includes acquisition charges such as brokerage, fees and duties.

iv. Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

4. Revenue Recognition

(ii) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are considered at actual / estimated factory cost or 97.5% of the realisable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

(iii) Income from erection and project management services is recognised on work done and billed based on:

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance of 2.5% is recognised as income when the contract is completed.

(iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of work completed and billed.

(v) Income from supply / erection of non-BHEL equipment / systems, and civil works is recognised based on despatches to customer / work done at project site.

Accounting for Finance Lease Transactions

In respect of assets manufactured and given on finance lease, the normal sale price/fair value/ contracted price is accounted for as cost of 'Fixed Assets on Lease' with corresponding credit to Profit & Loss Account treating it as turnover.

Lease rentals are recognised on accrual. Finance income which is part of lease rentals is recognised by applying implicit interest rate on the value of net investment in lease. Against lease rentals, matching annual charge representing recovery of net investment over the primary lease is made by the operation of Lease Equalisation Account, net of depreciation. Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy No.8. Depreciation as also Lease Equalisation Account are taken to Profit & Loss Account with corresponding adjustment in the net book value of lease assets.

6. Inventory Valuation

(i) Inventory except as indicated here under, are valued at lower of actual/estimated cost or realisable value; in respect of valuation of finished goods in plant and work-in-progress, cost mean factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iii) Raw material, components, loose tools, stores and spares are valued at weighted average cost,

(iv) Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work had commenced, is recognised. In arriving at this loss, total income from the project including incentives on exports/deemed exports is taken into consideration.

(v) The components and other materials purchased / manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

7. Terminal Benefits

Provident Fund and Employees' Family Pension Scheme contributions are accounted for on accrual basis. Liability for gratuity, half pay leave, leave encashable at the time of retirement and post retirement medical benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year.

8. Depreciation

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 16% Automatic/Semi-Automatic Machines 10% 15% 20%

Erection Equipment, Tools & Tackles 20%

Township Buildings

- Second Class 2.5% - Third Class 3.5% Railway Sidings 8% Locomotives & Wagons 8% Electrical Installations 8% Office & Other Equipments 8%

Drainage, Sewerage & 3.34% Water supply

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs. 10,000/- or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs.10,000/-.

(iv) At erection/project sites: The cost of roads, bridges and culverts is fully amortized over the tenure of the contract, while sheds, railway siding, electrical installations and other similar enabling works (other than purely temporary erections, wooden structures) are so depreciated after retaining 10% as residual value.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

9. Research and Development Expenditure

Research and development expenditure is charged to profit and loss account in the year of incurrence. Fixed assets acquired for purposes of research and development are capitalised.

10. Claims by/against the Company

(i) Claims for liquidated damages by/against the Company are recognised in accounts on acceptance.

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

11. Accounting for Foreign Currency Transactions

Exchange differences arising out of Foreign Currency Transactions are recognised as income or as expense in the period in which they arise.

Adjustment of exchange differences to the carrying amount of fixed assets are made as under:

a. For any increase/decrease in the liabilities related to fixed assets acquired in foreign currency due to translation;

b. On repayment of liabilities incurred for the purpose of acquiring fixed assets.

12. Translation of Financial Statements of Foreign Branches

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Current assets and current liabilities are translated at the closing rate, while fixed assets are translated at the rates in force when the transactions take place.

(iii) All translation variances at the end of the year are taken to Profit & Loss Account except in case of gain on current assets and liabilities in a country from which remittance of profit/funds is not possible or in case of gain on long term liabilities, the gain is treated as a reserve and subsequent loss is adjusted there against.

13. Provision for Warranties

(ii) Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

14. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation. Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue. Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

15. Deferred Revenue Expenditure

Lump sum payments made under Voluntary Retirement Scheme are treated as Deferred Revenue Expenditure and amortised over the period during which the benefits are expected to be derived by the Company.

Mar 31, 2000

1. The financial statements have been prepared as of a going concern on historical cost convention and on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Land acquired free of cost from the State Government is valued at Re. 1/- except for that acquired after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

Interest costs incurred on the funds borrowed specifically for projects and identified therewith are capitalised upto the time of commissioning of the relevant projects.

3. Investments

i. Long-term investments, are carried at cost. Permanent decline in the value of such investments, is recognised and provided for.

ii. Current investments, are carried at lower of cost and quoted/fair value. Unquoted current investments are carried at cost.

iii. The cost of investment includes acquisition charges such as brokerage, fees and duties.

iv. Any reduction in the carrying amount and any reversals of such reductions are charged or credited to the Profit & Loss Account.

4. Revenue Recognition

(ii) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are considered at actual / estimated factory cost or 97.5% of the realisable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

(iii) Income from erection and project management services is recognised on work done and billed based on :

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance of 2.5% is recognised as income when the contract is completed.

(iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of work completed and billed.

(v) Income from supply / erection of non-BHEL equipment/systems, and civil works is recognised based on despatches to customer / work done at project site.

5. Accounting for Finance Lease Transactions

In respect of assets manufactured and given on finance lease, the normal sale price/fair value/ contracted price is accounted for as cost of `Fixed Assets on Lease' with corresponding credit to Profit & Loss Account treating it as turnover.

Lease rentals are recognised on accrual. Finance income which is part of lease rentals is recognised by applying implicit interest rate on the value of net investment in lease. Against lease rentals, matching annual charge representing recovery of net investment over the primary lease is made by the Operation of Lease Equalisation Account, net of depreciation. Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy No.8. Depreciation as also Lease Equalisation Account are taken to Profit & Loss Account with corresponding adjustment in the net book value of lease assets.

6. Inventory Valuation

(ii) Finished goods, in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) Raw material, components, loose tools, stores and spares are valued at weighted average cost.

(v) The components, and other materials purchased / manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

7. Terminal Benefits

Provident Fund and `Employees' Family Pension Scheme contributions are accounted for on accrual basis. Liability for gratuity, half pay leave, leave encashable at the time of retirement and post retirement medical benefits are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year.

8. Depreciation

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 16%

Automatic/Semi-Automatic Machines 10% 15% 20%

Erection Equipment, Tools & Tackles 20%

Township Buildings

- Second Class 2.5%

- Third Class 3.5%

Railway Sidings 8%

Locomotives & Wagons 8%

Electrical Installations 8%

Office & Other Equipments 8%

Drainage, Sewerage & 3.34% Water supply

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iv) At erection/project sites : The cost of roads, bridges and culverts' is fully amortized over the tenure of the contract, while sheds, railway siding, electrical installations and other similar enabling works (other than purely temporary erections, wooden structures) are so depreciated after retaining 10% as residual value.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

9. Research and Development Expenditure

Research and development expenditure is charged to profit and loss account in the year of incurrence. Fixed, assets acquired for purposes of research and development are capitalised.

10. Claims by/against the Company

(i) Claims for liquidated damages by/against the Company are recognised in accounts on acceptance.

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

11. Accounting for Foreign Currency Transactions

Exchange differences arising out of Foreign Currency Transactions are recognised as income or as expense in the period in which they arise.

Adjustment of exchange differences to the carrying amount of fixed assets are made as under :

a. For any increase/decrease in the liabilities related to fixed assets acquired in foreign currency due to translation;

b. On repayment of liabilities incurred for the purpose of acquiring fixed assets.

12. Translation; of Financial Statements of Foreign Branches

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Current assets and current liabilities are translated at the closing rate, while fixed assets are; translated at the rates in force when the transactions take place.

3. Provision for Warranties

(ii) Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

14. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation. Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

5. Deferred Revenue Expenditure

Lump sum payments made under Voluntary Retirement Scheme are treated as Deferred Revenue Expenditure and amortised over the period during which the benefits are expected to be derived by the Company.

Mar 31, 1999

1. The financial statements have been prepared as of a going concern on historical cost convention and generally on accrual method of accounting in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets is added to/reduced from the cost.

Interest costs incurred on the funds borrowed specifically for projects and identified therewith are capitalised upto the time of commissioning of the relevant projects.

3. Investments

(i) Long-term investments, are carried at cost. Permanent decline in the value of such investments, is recognised and provided for.

(ii) Current investments, are carried at lower of cost and quoted/fair value. Unquoted current investments are carried at cost.

(iii) The cost of investment includes acquisition charges such as brokerage, fees and duties.

(iv) Any reduction in the carrying amount & any reversals of such reductions are charged or credited to the Profit & Loss Account.

4. Revenue Recognition

(i) Sales are recorded based on significant risks and rewards .of ownership being transferred in favour of the customer. Sales include goods despatched to customers by partial shipment which are billed or unbilled pending formal billing.

(ii) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of the realisable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

(iii) Income from erection and project management services is recognised on work done and billed based on :

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance of 2.5% is recognised as income when the contract is completed.

(iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of work completed and billed.

(v) Income from supply/erection of non-BHEL equipment/systems, and civil works is recognised based on despatches to customer/work done at project site.

5. Accounting for Finance Lease Transactions

In respect of assets manufactured and given on finance lease, the normal sale price/fair value/contracted price is accounted for as cost of 'Fixed Assets on Lease' with corresponding credit to Profit & Loss Account treating it as turnover.

6. Inventory Valuation

(ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/ estimated factory cost or at 97.5% of the realisable value, whichever is lower.

(iii) Raw material, components, stores and spares are valued at weighted average cost.

(iv) Loose tools costing Rs. 10,000 or less and those whose book value at the beginning of the year is Rs.10,000 or less are charged off to revenue. Loose tools whose original value is more than Rs. 10,000 are valued at the year end by reducing annually at a flat rate of 20% irrespective of the date of acquisition.

(vi) The components and other materials purchased/manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

7. Terminal Benefits

(i) Provident Fund and Employees' Family Pension Scheme contributions are accounted for on accrual basis. Liability for gratuity, half pay leave, leave encashable at the time of retirement are accounted for in accordance with actuarial valuation. The actuarial liability is determined with reference to employees at the beginning of each calendar year.

(ii) Post retirement medical benefits are accounted for on the basis of eligible claims.

8. Depreciation

(i) Depreciation on fixed assets (other than those used abroad under contract) is charged on straightline method as per the rates prescribed in Schedule XIV of the Companies Act, 1956, except where depreciation is charged at rates shown hereunder :-

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 16%

Automatic/Semi-Automatic Machines 10% 15% 20%

Erection Equipment, Tools & Tackles 20%

Township Buildings

- Second Class 2.5%

- Third Class 3.5%

Railway Sidings 8%

Locomotives & Wagons 8%

Electrical Installations 8%

Office & Other Equipment 8%

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs.10,000/- or less and those whose written down value as at the beginning of the year is Rs.10,000/- or less, are depreciated fully. In so tar as township buildings are concerned, the cost per tenement is the basis for the limit of Rs.10,000/-.

(iv) At erection/project sites : The cost of roads, bridges and culverts is fully amortised over the tenure of the contract, while sheds, railway siding, electrical installations and other similar enabling works (other than purely temporary erections, wooden structures) are so depreciated after retaining 10% as residual value.

(v) Purely Temporary Erection such as wooden structures are fully depreciated in the year of construction.

9. Research and Development Expenditure

Research and development expenditure is charged to profit and loss account in the year of incurrence. Fixed assets acquired for purposes of research and development are capitalised.

10. Claims by/against the Company

(i) Claims for liquidated damages by/against the Company are recognised in accounts on acceptance.

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

11. Accounting for Foreign Currency Transactions

Exchange differences arising out of Foreign Currency Transactions are recogoised as income or as expense in the period in which they arise.

Adjustment of exchange differences to the carrying amount of fixed assets are made as under :

a. For any increase/decrease in the liabilities related to fixed assets acquired in foreign currency due to translation;

b. On repayment of liabilities incurred for the purpose of acquiring fixed assets.

12. Translation of Financial Statements of Foreign Branches

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Current assets and current liabilities are translated at the closing rate, while fixed assets are translated at the rates in force when the transactions take place.

13. Provision for Warranties

(ii) Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

14. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation. Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets While those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognised as revenue over the period to which these are related on the principle of matching costs to revenue. Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 1998

1. The Accounts have been drawn as of going concern on historical cost convention based generally on accrual method of accounting.

2. Accounting for fixed assets and investments

(i) Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower.Effect of extraordinary events such as devaluation/ revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets are added to /reduced from the cost.

Land acquired free of cost from the State Governments is valued at Re.1 except for that acquired on or after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

Interest costs incurred on the funds borrowed specifically for projects and identified therewith are capitalised upto the time of commissioning of the relevant projects.

(ii) Investments

Quoted investments are carried at lower of the cost or market price. Unquoted investments intended to be held for long or till maturity are valued at cost.

3. Revenue Recognition

(ii) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of the realisable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

(iii) Income from erection and project management services is recognised on work done and billed based on :

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance of 2.5% is recognised as income when the contract is completed.

(iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of work completed and billed.

(v) Income from supply/erection of non-BHEL equipment/systems, and civil works is recognised based on despatches to customer/ work done at project site.

4. Accounting For Finance Lease Transactions

In respect of assets manufactured and given on finance lease, the normal sale price/fair value/contracted price is accounted for as cost of 'Fixed Assets on lease' with corresponding credit to Profit & Loss Account treating it as turnover.

Lease rentals are recognised on accrual. Finance income which is part of lease rentals is recognised by applying implicit interest rate on the value of net investment in lease. Against lease rentals, matching annual charge representing recovery of net investment over the primary lease is made by the operation of Lease Equalisation Account, net of depreciation. Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy No. 7. Depreciation as also Lease Equalisation Account are taken to Profit & Loss Account with corresponding adjustment in the net book value of lease assets.

5. Inventory valuation

(i) Inventory except as indicated here under are valued at lower of actual/estimated cost or realisable value; in respect of valuation of finished goods in plant and work-in-progress, cost mean factory cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

(iii) Raw material, components, stores and spares are valued at weighted average cost.

(iv) Loose tools costing Rs. 10,000 or less and those whose book value at the beginning of the year is Rs.10,000 or less are charged off to revenue. Loose tools whose original value is more than Rs. 10,000 are revalued at the year end by reducing annually at a flat rate of 20% irrespective of the date of acquisition.

(v) Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work has commenced, is recognised. In arriving at this loss, total income from the project including incentives on exports/deemed exports is taken into consideration.

(vi) The components and other materials purchased/manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

6. Terminal Benefits

1. Gratuity and half pay leave encashment liability are determined in accordance with the actuarial valuation based on data relatable to eligible employees in service at the beginning of each calendar year.

2. Earned leave accrued to employees as at the end of the accounting year is fully provided for.

3. Post retirement medical benefits are accounted for on the basis of eligible claims.

4. Liability for payment of pension to optee employees and in respect of ex-employees is accounted for on accrual basis by contributing the required amount to appropriate authorities.

7. Depreciation

Single Double Triple Shift Shift Shift General Plant & Machinery 8% 12% 16% Automatic/Semi - Automatic Machines 10% 15% 20% Erection Equipment, Tools & Tackles 20% Township Buildings - Second Class 2.5% - Third Class 3.5% Railway Sidings 8% Locomotives & Wagons 8% Electrical Installations 8% Office & Other Equipments 8%

In respect of additions to/deductions from the fixed assets,depreciation is charged on pro-rata monthly basis.

(ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

(iii) Fixed assets costing Rs. 10,000 or less and those whose written down value as at the beginning of the year is Rs.10,000 or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000.

(iv) At erection/project sites : The cost of roads, bridges and Culverts is fully amortized over the tenure of the contract, while sheds, railway siding, electrical installations and other similar enabling works (other than purely temporary erections, wooden structures) are so depreciated after retaining 10% as residual value.

(v) Purely Temporary Erections such as wooden structures are fully depreciated in the year of construction.

(vi) Leasehold Land & Buildings thereon are depreciated over the period of lease.

8. Research and development expenditure

Research and development expenditure is charged to profit and loss account in the year of incurrence. Fixed assets acquired for purposes of research and development are capitalised.

9. Claims by/against the company

(i) Claims for liquidated damages by/against the Company are recognised in accounts on acceptance.

(ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

(iii) Amounts due in respect of price escalation claims and / or variations in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

10.A. Accounting for Foreign currency Transactions

Exchange differences arising out of Foreign Currency Transactions are recognised as income or as expense in the period in which they arise.

Adjustment of exchange differences to the carrying amount of fixed assets are made as under :

a) For any increase/decrease in the liabilities related to fixed assets acquired in foreign currency due to translation;

b) On repayment of liabilities incurred for the purpose of acquiring fixed assets.

The effect of past extraordinary and permanent fluctuations in the exchange rate including on devaluation/revaluation other than those related to fixed assets, are treated as deferred revenue, charge and adjusted over to the residual period of such liabilities.

10.B. Translation of Financial Statements of Foreign Branches

(i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

(ii) Current assets and current liabilities are translated at the closing rate, while fixed assets are translated at the rates in force when the transactions take place.

(iii) All translation variances at the end of the year are taken to Profit & Loss Account except in case of gain on current assets and liablities in a country from which remittance of profit/funds is not possible or in case of gain on long term liabilities, the gain is treated as a reserve and subsequent loss is adjusted there against.

11. Provision for warranties

Provision for contractual obligations in respect of completed contracts under warranty at the year end is considered at 2.5% of the value of contract. In the case of contracts for supply of more than a single product, 2.5% of the value of each completed product is provided.

Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

12. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 1997

1. The Accounts have been drawn as of going concern on historical cost convention based generally on accrual method of accounting.

2. Accounting for fixed assets and investments

(i) Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at the cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets are added to/reduced from the cost.

Land acquired free of cost from the State Governments is valued at Re. 1 except for that acquired on or after 16th July 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

Interest costs incurred on the funds borrowed specifically for projects and identified therewith are capitalised upto the time of commissioning of the relevant projects.

ii) Investments

Quoted investments are carried at lower of the cost or market price. Unquoted investments intended to be held for long or till maturity are valued at cost.

3. Revenue Recognition

Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods despatched to customers by partial shipment which are billed or unbilled pending formal billing.

ii) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas based power plants, boilers, auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipments represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of the realisable value, whichever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

iii) Income from erection and project management services is recognised on work done and billed based on:

Percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value, the balance of 2.5% is recognised as income when the contract is completed.

iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of work completed and billed.

v) Income from supply/erection of non-BHEL equipment / systems, and civil works is recognised based on despatches to customer/ work done at project site.

4. Accounting for Finance Lease Transactions

In respect of assets manufactured and given on finance lease, the normal sale price / fair value / contracted price is accounted for as cost of 'Fixed Assets on lease' with corresponding credit to Profit & Loss Account treating it as turnover.

Lease rentals are recognised on accrual. Finance income which is part of lease rentals is recognised by applying implicit interest rate on the value of net investment in lease. Against lease rentals, matching annual charge representing recovery of net investment over the primary lease is made by the operation of Lease Equalisation Account, net of depreciation. Depreciation on the same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy No. 7. Depreciation as also Lease Equalisation Account are taken to Profit & Loss Account with corresponding adjustment in the net book value of lease assets.

5. Inventory Valuation

i) Inventory except as indicated here-under, are valued at lower of the actual / estimated cost or realisable value; in respect of valuation of finished goods in plant and work-in-progress, cost mean factory cost; actual / estimated factory cost includes excise duty payable on manufactured goods.

ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

iii) Raw material, components, stores and spares are valued at weighted average cost.

iv) Loose tools costing Rs. 10,000 or less and those whose book value at the beginning of the year is Rs. 10,000 or less are charged off to revenue. Loose tools whose original value is more than Rs. 10,000 are revalued at the year end by reducing annually at a flat rate of 20% irrespective of the date of acquisition.

v) Where current estimates of cost and selling price of an individually identified project forming part of a contract indicates loss, the anticipated loss in respect of such project on which the work has commenced, is recognised. In arriving at this loss, total income from the project including incentives on exports / deemed exports is taken into consideration.

vi) The components and other materials purchased/ manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

6. Terminal Benefits

2. Earned leave accrued to employees as at the end of the accounting year is fully provided for.

3. Post retirement medical benefits are accounted for on the basis of eligible claims.

4. Liability for payment of pension to optee employees and in respect of ex-employees is accounted for on accrual basis by contributing the required amount to appropriate authorities.

7. Depreciation

i) Depreciation on fixed assets (other than those used abroad under contract) is charged on straightline method as per the rates prescribed in Schedule XIV of the Companies Act, 1956, except where depreciation is charged at rates shown hereunder

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 18% Automatic/Semi - Automatic Machines 10% 15% 20% Erection Equipment, Tools & Tackles 20% Township Buildings - Second Class 2.5% - Third Class 3.5% Railway Sidings 8% Locomotives & Wagons 8% Electrical Installations 8% Office & Other Equipments 8%

In respect of additions to I deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

iii) Fixed assets costing Rs. 10,000 or less and those whose written down value as at the beginning of the year is Rs. 10,000 or less, are depreciated fully. In so far as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000.

iv) At erection sites : Temporary sheds, railway sidings and electrical installations are depreciated over the period of the contract after retaining 10% as a residual value. Road, Bridges and Culverts are fully depreciated over the period of contract.

v) Leasehold Land & Buildings thereon are depreciated over the period of lease.

vi) Where the carrying amount on any fixed assets has undergone a change in accordance with the policy for Foreign Currency Transactions, the depreciation on the unamortised depreciable asset is spread over the residual useful life of the asset.

8. Research and development expenditure

Research and Development expenditure is charged to profit and loss account in the year of incurrence. Fixed assets acquired for purposes of research and development are capitalised.

9. Claims by/against the Company

i) Claims for liquidated damages by/against the Company are recognised in accounts on acceptance.

ii) Claims for export subsidy, duty draw back, refund of customs duty and insurance are taken into account on accrual.

iii) Amounts due in respect of price escalation claims and/or variations in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and/or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

10A. Accounting for Foreign Currency Transactions

Exchange differences arising out of Foreign Currency Transactions are recognised as income or as expense in the period in which they arise.

Adjustment of exchange differences to the carrying amount of fixed assets are made as under:

a) For any increase/decrease in the liabilities related to fixed assets acquired in foreign currency due to translation:

b) On repayment of liabilities incurred for the purpose of acquiring fixed assets.

The effect of past extraordinary and permanent fluctuations in the exchange rate including on devaluation / revaluation other than those related to fixed assets, are treated as deferred revenue charge and adjusted over to the residual period of such liabilities.

10B. Translation of Financial Statements of Foreign Branches

i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

ii) Current assets and current liabilities are translated at the closing rate, while fixed assets are translated at the rates in force when the transactions take place.

iii) All translation variances at the end of the year are taken to Profit & Loss Account except in case of gain on current assets and liabilities in a country from which remittance of profit/funds is not possible or in case of gain on long term liabilities the gain is treated as a reserve and subsequent loss is adjusted there against.

11. Provision for Warranties

Warranty claims / expenses on rectification work are accounted for against natural heads in the ear of actual incurrence.

12. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses are recognised as revenue over the period to which these are related on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value it received free.,

Mar 31, 1996

1. The Accounts have been drawn as of going concern on historical cost convention based generally on accrual method of accounting.

2. Accounting for fixed assets and investments

i) Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets are added to/reduced from cost.

Land acquired free of cost from the State Governments is valued at Re. 1 except for that acquired on or after 16th July, 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve. Interest costs incurred on funds borrowed specifically for projects and identified therewith are capitalised upto the time of commissioning of the relevant projects.

ii) Investments

Quoted investments are carried at lower of cost or market price. Unquoted investments intended to be held for long or till maturity are valued at cost.

3. Revenue Recognition

i) Sales are recorded based on significant risks and rewards of ownership being transferred in favour of the customer. Sales include goods despatched to the customer by partial shipment which are billed/unbilled pending formal billing.

ii) Recognition of sales revenue in respect of long production cycle items (Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors and industrial turbo sets) is made on technical estimates. When the aggregate value of shipment represents 30% or more of the realisable value, they are considered at 97.5% of the realisable value or in its absence, at the quoted price. Otherwise, they are considered at actual/estimated factory cost or 97.5% of realisable value, which-ever is lower. The balance 2.5% is recognised as revenue on completion of supplies under the contract.

iii) Income from erection and project management services is recognised on work done and billed based on percentage of completion; or

The intrinsic value, reckoned at 97.5% of contract value. The balance 2.5% is recognised as income when the contract is completed.

iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of the work completed and billed.

v) Income from supply/erection of Non-BHEL equipment/ systems and civil works is recognised based on despatches to customer/work done at project site.

4. Inventory Valuation

i) Inventories except as indicated here-under, are valued at lower of actual/estimated cost or realisable value; in respect of valuation of finished goods in plant and work-in-progress, cost mean factory Cost; actual/ estimated factory cost includes excise duty payable on manufactured goods.

ii) Finished goods in Plant and work-in-progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors & industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

iii) Raw-material, components, stores and spares are valued at weighted average cost.

vi) The components and other materials purchased/ manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

5. Terminal Benefits

2. Earned leave accrued to employees as at the end of the accounting year is fully provided for.

3. Post retirement medical benefits are accounted for on the basis of eligible claims.

4. Liability for payment of pension to optee employees and in respect of ex-employees is accounted for on accrual basis by contributing the required amount to appropriate authorities.

6. Research and Development Expenditure

Research and Development expenditure is charged to profit and loss account in the year of incurrence. Fixed assets acquired for purposes of research and development are capitalised.

7. Depreciation

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 16% Automatic/Semi-Automatic Machines 10% 15% 20% Erection Equipment, Tools & Tackles 20% Township Buildings - Second Class 2.5% - Third Class 3.5% Railway Sidings 8% Locomotives & Wagons 8% Electrical Installations 0% Office & Other Equipment 8%

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro-rata monthly basis.

ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

iii) Fixed assets costing Rs. 10,000 or less and those whose written down value as at the beginning of the year is Rs. 10,000 or less, are depreciated fully in so tar as township buildings are concerned, the cost per tenement is the basis for the limit of Rs. 10,000.

iv) At erection sites : Temporary sheds, railway siding and electric installation are depreciated over the period of the contract after retaining 10% as a residual value. Road, Bridges and Culverts are fully depreciated over the period of contract.

v) Lease hold land and Buildings thereon are depreciated over the period of lease.

8. Claims by/against the Company

i) Claims for liquidated damages by/against the Company are recognised in the accounts on acceptance.

ii) Claims for export subsidy, duty draw back, refund of custom duty and insurance are taken into account on accrual.

iii) Amounts due in respect of price escalation claims and/or variations in contract work are recognised as revenue only when there are conditions in the contracts for such claims or variations and / or evidence of the acceptability of the same from customers. However, escalation is restricted to intrinsic value.

9. Accounting for Foreign currency Transactions

In case of current assets and current liabilities, the effect of conversion at the year end exchange rate is taken to the Profit and Loss Account.

Exchange variation on long term liabilities other than those for fixed assets are recognised to revenue. The effect of extraordinary and permanent fluctuations in exchange rate including on devaluation/revaluation, are adjusted to the cost of the relevant fixed assets in case of long term liabilities relatable to acquisition of fixed assets. In other cases, the loss is treated as a deferred revenue charge adjusted over the residual period of such liabilities and gain, if any, is considered as a capital reserve.

10. Translation of Financial Statements of Foreign Branches

i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

ii) Current assets and current liabilities are translated at the closing rate while fixed assets are translated at the rates in force when the transactions take place.

iii) All translation variances at the end of the year are taken to Profit & Loss Account except in case of gain on current assets and liabilities in a country from which remittance of profit/funds is not possible or in case of gain on long term liabilities, the gain is treated as a reserve and subsequent loss is adjusted there against.

11. Provision for warranties

Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

12. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognised as revenue over the period to which these relate on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

Mar 31, 1995

1.Accounts have been drawn on historical cost convention based on accrual method of accounting.

2. Accounting for fixed assets and Investments

I) Fixed Assets

Fixed assets (other than land acquired free from State Government) are carried at cost of acquisition or construction or book value less accumulated depreciation.

Cost includes value of internal transfers for capital works, taken at actual/estimated factory cost or market price, whichever is lower. Effect of extraordinary events such as devaluation/revaluation in respect of long term liabilities/loans utilised for acquisition of fixed assets are added to/reduced from cost.

Land acquired free of cost from the State Government is valued at Re. 1 except for that acquired on or after 16th July, 1969, in which case the same is valued at the acquisition price of the State Government concerned, by corresponding credit to capital reserve.

Interest costs incurred on funds borrowed specifically for projects and identified therewith are capitalised upto the time of commissioning of the relevant projects.

ii) Investments

Quoted investments are carried at lower of cost or market price. Unquoted investments intended to be held till maturity are valued at cost.

3. Revenue Recognition

iii) Income from erection and project management services is recognised on work done and billed based on percentage of completion or the intrinsic value, reckoned at 97.5% of contract value. The balance 2.5% is recognised as income when the contract is completed.

iv) Income from engineering services rendered is recognised at realisable value based on the certified percentage of the work completed and billed.

v) Income from supply/erection of Non-BHEL equipment/ systems and civil works is recognised based on despatches to customer/work done at project site.

4. Inventory Valuation

i) Inventories except as indicated here-under, are valued at lower of actual/estimated cost or realisable value; in respect of valuation of finished goods in plant and work-in-progress cost mean factory Cost; actual/estimated factory cost includes excise duty payable on manufactured goods.

ii) Finished goods in Plant and work in progress involving Hydro and Thermal sets including gas based power plants, boilers, boiler auxiliaries, compressors & industrial turbo sets are valued at actual/estimated factory cost or at 97.5% of the realisable value, whichever is lower.

iii) Raw-material, components, stores and spares are valued at weighted average cost.

v) Where current estimates of cost and selling price of a contract indicates loss, the anticipated loss in respect of the part of the contract on which work has commenced is recognised. In assessing the loss, total income from the contract including incentives on exports/deemed exports is taken into consideration.

vi) The components and other materials purchased/ manufactured against production orders but declared surplus are charged off to revenue retaining residual value based on technical estimates.

5. Gratuity

Gratuity is determined in accordance with the actuarial valuation based on data relatable to eligible employees in the service at the beginning of each calendar year.

6. Research and Development Expenditure

Research and Development expenditure is charged to profit and loss account in the year of incurrence. Fixed assets acquired for purposes of research and development are capitalised.

7. Depreciation

i) Depreciation on fixed assets other than those used abroad under contract, is charged on straightline method as per the rates prescribed in Schedule XIV of the Companies Act, 1956, except in the following cases where depreciation is charged at rates shown hereunder:-

Single Double Triple Shift Shift Shift

General Plant & Machinery 8% 12% 16% Automatic/Semi - Automatic Machines 10% 15% 20% Erection Equipment, Tools & Tackles 20% Township Buildings - Second Class 2.5% - Third Class 3.5% Railway Sidings 8% Locomotives & Wagons 8% Electrical Installations 8% Office & Other Equipment 8%

In respect of additions to/deductions from the fixed assets, depreciation is charged on pro rata monthly basis.

ii) Fixed assets used outside India pursuant to long term contracts are depreciated over the duration of the initial contract.

iii) Fixed assets costing Rs. 10,000 or less and those whose written down value as at the beginning of the year is Rs. 10,000 or less, are depreciated fully. In so far as township buildings are concemed the cost per tenement is the basis for the limit of Rs. 10,000.

iv) At erection sites: Temporary sheds, railway siding and electric installation are depreciated over the period of the contract after retaining 10% as a residual value. Road, Bridges and Culverts are fully depreciated over the period of contract.

v) Buildings on lease hold land are depreciated over the period of lease.

Claims by/against the Company

i) Claims for liquidated damages by/against the Company are recognised in the accounts on acceptance.

ii) Claims for export subsidy, duty draw back, refund of custom duty and insurance are taken into account on accrual.

9. Accounting for Foreign Currency Transactions

In case of current assets and current liabilities the effect of conversion at year end exchange rate is taken to the profit and loss account.

In case of long term liabilities variations arising from normal exchange rate fluctuations are recognised and taken to profit & loss account if it results in loss and ignored if there is net gain.

The effect of extraordinary and permanent fluctuations in exchange rate including on devaluation/revaluation are adjusted to the cost of the relevant fixed assets in case of long term liabilities relatable to acquisition of fixed assets In other cases the loss is treated as a deferred revenue charge adjusted over the residual period of such liabilities and gain, if any, is considered as a capital reserve.

10. Translation of Financial Statements of Foreign Branches

i) Items of income and expenditure are translated at average rate except depreciation, which is converted at the rates adopted for the corresponding fixed assets.

ii) Current assets and current liabilities are translated at closing rate while fixed assets are translated at the rates in force when the transactions take place.

iii) All translation variances at the end of the year are taken to Profit & Loss Account except in case of gain on current assets and liabilities in a country from which remittance of profit/funds is not possible or in case of gain on long term liabilities, the gain is treated as a reserve and subsequent loss is adjusted the against.

11. Provision for Warranties

Provision for contractual obligations in respect of completed contracts under warranty at the year end is considered at 2.5% of the value of contract. In the case of contracts for supply of more than a single product 2.5% of the value of each completed product is provided.

Warranty claims/expenses on rectification work are accounted for against natural heads in the year of actual incurrence.

12. Government Grants

Government Grants are accounted when there is reasonable certainty of their realisation.

Grants related to fixed depreciable assets are adjusted against the gross cost of the relevant assets while those related to non-depreciable assets are credited to capital reserve. Grants related to revenue, unless received as compensation for expenses/losses, are recognised as revenue over the period to which these relate on the principle of matching costs to revenue.

Grants in the form of non-monetary assets are accounted for at the acquisition cost, or at nominal value if received free.

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